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TPG and Bill McGlashan clash over his exit
A fight has broken out between TPG and Bill McGlashan, the senior executive caught up in a huge college bribery scandal, over how he left the $103 billion investment giant, Michael de la Merced of DealBook reports.
Mr. McGlashan had initially been put on leave by TPG after being accused of collaborating with William Singer, who ran the college preparatory business at the center of the scandal. Prosecutors say that Mr. Singer advised the financier to claim that his son had learning disabilities, and that Mr. McGlashan paid $50,000 to Mr. Singer’s charity.
TPG said it fired him for cause yesterday. “We believe the behavior described to be inexcusable and antithetical to the values of our entire organization,” the firm said in a statement.
TPG told employees and partners that it learned about the accusations against Mr. McGlashan only after prosecutors unsealed their case, according to an internal note reviewed by DealBook.
But Mr. McGlashan said that he had already resigned. “I am deeply sorry this very difficult situation may interfere with the work to which I have devoted my life,” he wrote in a note.
Emails between Mr. McGlashan and top TPG executives, provided by his spokesman, appear to confirm that. Mr. McGlashan emailed his resignation at 1:02 p.m. yesterday, according to the correspondence. At 2:03 p.m., Jon Winkelried, one of TPG’s co-C.E.O.s, replied, acknowledging receipt of the resignation — but he also included a notice of termination.
At 2:20 p.m., Mr. McGlashan responded, “I am perplexed by your attempt to terminate me because, as you acknowledged in your email, you had already received my resignation.”
It’s unclear what is at stake financially for Mr. McGlashan in terms of his TPG severance. In his email, Mr. Winkelried wrote to Mr. McGlashan, “We will be in touch to advise you of the economic consequences of the termination of your employment.”
A spokesman for TPG declined to comment on the emails.
More: The man who tipped off authorities to the college admissions scandal was reportedly a financier who was being investigated in a securities fraud case. And here’s a reminder why paying bribes to get your child into college is a federal crime.
Facebook’s privacy push causes a staff shake-up
Last week, Mark Zuckerberg announced that Facebook would pivot toward privacy. With two of the company’s top executives leaving just days later, it appears the change has had an immediate impact.
The two executives — Chris Cox, Facebook’s chief product officer, who is widely regarded as the company’s No. 3, and Chris Daniels, the head of WhatsApp — announced yesterday that they were to leave the company. Their departure comes “after disagreements with Mark Zuckerberg, the chief executive, over the social network’s future direction,” according to Mike Isaac of the NYT.
“The differences stemmed from Mr. Zuckerberg’s asserting control over his company and its apps — Instagram, WhatsApp and Facebook Messenger — by rolling out a plan to integrate the services into a single privacy-focused platform, according to six people involved in the situation,” he adds.
Several executives at Facebook feared that knitting together the apps could take a toll on the popularity and growth of their individual products, according to Mr. Isaac. They were also reportedly worried that they could lose autonomy and power. Traces of those sentiments could be seen in a public statement issued by Mr. Cox.
“Facebook has become Zuckerberg’s company now more than ever,” Shira Ovide of Bloomberg Opinion writes. “Whether that’s good for the company or for the company’s billions of users — we’ll see.”
Boeing’s problems continue to mount
In the wake of two fatal crashes within five months that involved its 737 Max airplanes, the company is reeling.
Boeing will suspend delivery of its 737 Max jets, it announced yesterday, but continue to produce them. It currently builds 52 aircraft a month, many of which are Max models, and entirely shutting down production would prove costly.
But the policy may only last so long. Boeing’s production facility in Renton, Wash., has only limited capacity for storing the airplanes, according to the WSJ. Boeing may, however, be able to apply for special permits to fly the planes to other storage sites, according to Reuters.
Meanwhile, big questions hang over the Max’s software. Pilots from Southwest Airlines and American Airlines requested software updates for some of the 737 Max’s automated systems last year, reports the NYT. They were promised updates within six weeks, one pilot said, but they have still not arrived. Similarities between the two recent crashes point to potential problems with the automated system that requires the update.
And the U.S. Air Force has also lost trust in Boeing. In a case unrelated to the Max debacle, Air Force officials said that quality control issues with a new aerial refueling tanker caused it to suspend deliveries in February.
Britain’s Parliament votes to delay Brexit
British lawmakers yesterday voted to postpone the country’s departure from the E.U., but narrowly failed to wrest control of the Brexit process from Prime Minister Theresa May’s government, write Ellen Barry and Stephen Castle of the NYT.
“Mrs. May fended off — by just two votes — a remarkable power grab by lawmakers frustrated at months of political deadlock that has left the country in limbo with just 15 days to go before its scheduled departure from the bloc. They later voted by 412 to 202 for a motion that means that Britain will almost certainly not leave the E.U. as scheduled on March 29.”
“What remains unclear now is how long the delay will be. Mrs. May plans to hold a third vote on her unpopular plan for withdrawal, despite have suffered two staggering defeats on it already. If the prime minister should succeed in a third attempt, she would then request a short delay — no more than three months — from E.U. leaders.”
“But the motion noted that should her plan go down to defeat once again, Mrs. May might have to ask European leaders for a much longer delay, with unknown consequences.”
More: Brexit’s importance to the global economy may have been overstated.
Fear and doubt at a top deal-makers’ party
Tulane’s Corporate Law Institute, a conference held every spring in New Orleans, is where the mergers-and-acquisitions world gathers to talk shop. Usually, it’s about how good business is — but a sense of unease has intruded this year’s festivities, Michael de la Merced of DealBook reports.
Bankers and lawyers should be celebrating. Last year’s $4.2 trillion in global announced deals was the third-best year ever, according to Citigroup. Nearly every industry enjoyed a rise in deal-making.
And M. & A. should keep rolling on. Mark Shafir, the co-head of mergers and acquisitions at Citigroup, and others at the conference noted that takeover financing remains cheap, shareholders seem to support sensible deals and shareholder activists are continuing to push companies into transactions.
But “there is no doubt that we are in a much less bullish environment for M. & A. than a year ago,” Mr. Shafir said. Among the pressures on deal-making:
• There are fears about a potential recession, the ongoing trade wars and the persistent worry that the stock market will suffer like it did late last year.
• Regulators are a big issue too, especially the concern that they could be used as political cudgels. One of the big topics at the conference was the growing importance of overseers like Cfius, the American government panel that reviews cross-border deals for national security concerns.
• And then there’s the natural cycle of deal-making. Booms tend to be followed by big drops in volumes, and this cycle has gone on longer than most, Mr. Shafir said.
Sandy Hook families can sue Remington
The Connecticut Supreme Court cleared the way for a lawsuit against the companies that manufactured and sold the semiautomatic rifle used in the massacre at Sandy Hook Elementary School in 2012, Rick Rojas and Kristin Hussey of the NYT report.
The ruling allows a case, brought by victims’ families, to go around the immunity that Congress granted gun companies to shield them from litigation when their weapons are used in a crime. That leaves open the potential for Remington, which made the rifle used in the attack, to be held liable.
Lawyers for the families argued that advertising campaigns for guns appeared to be “courting” troubled young men, like Adam Lanza, who carried out the Sandy Hook shooting. In a 4-3 ruling, justices “found that the sweeping federal protections did not prevent the families from bringing a lawsuit based on wrongful marketing claims,” Mr. Rojas and Ms. Hussey write.
“The decision represents a significant development in the long-running battle between gun control advocates and the gun lobby,” Mr. Rojas and Ms. Hussey add. And it could chart a “possible legal road map for victims’ relatives and survivors from other mass shootings.”
Trump says trade news is three or four weeks off
President Trump appears to have reeled in his claim on Wednesday of being “not in a rush whatsoever” to reach a trade deal with China.
“We’ll have news on China. Probably one way or the other, we’re going to know over the next three to four weeks,” Mr. Trump told reporters yesterday, according to CNBC. He added that China had been “very responsible and very reasonable.”
Such optimism may have been helped along by the news that China made “last-minute changes to a proposed foreign-investment law,” in an attempt to “address U.S. complaints about forced technology transfer,” according to the WSJ. Intellectual property concerns have been a major part of the trade dispute between America and China.
But a final agreement is still some way off. Treasury Secretary Steven Mnuchin said yesterday that a proposed meeting between Mr. Trump and President Xi Jinping of China won’t happen this month because there is still more work to do. Sources tell Bloomberg it could happen in April.
Say hello to Tesla’s new car, the Model Y
Elon Musk last night unveiled a new seven-seat compact sport-utility vehicle called the Model Y, Neal E. Boudette and Raymond Zhong of the NYT write:
• “The Model Y will be available beginning next year, the company said, at prices ranging from $39,000 to $60,000, depending on the model, with a $2,500 deposit.”
• “A long-range version will be able to drive 300 miles on a single charge, it said, while the $60,000 Performance model will have a top speed of 150 miles per hour.”
• “‘It has the functionality of an S.U.V., but it will ride like a sports car,’ Mr. Musk said. ‘This thing will be really tight in corners.’”
The unveiling “comes as Tesla confronts sales challenges,” Mr. Boudette and Mr. Zhong write. Sales of the Model S and Model X have been flattening, and its push to sell the Model 3 for $35,000 remains shrouded in uncertainty as the company works out how to cut costs to make that pricing possible.
Andrew Weissmann, one of Robert Mueller’s top deputies, is said to be leaving the special counsel’s office.
Lee Fixel, a partner at Tiger Global Management, is leaving the hedge fund in June.
The meat-substitute start-up Impossible Foods hired Dennis Woodside, who was Dropbox’s C.O.O., as its president.
Tesla named Vaibhav Taneja as its new chief accounting officer.
Goldman Sachs plans to cut 65 jobs because of “economic” factors.
The speed read
• Uber reportedly plans to publicly disclose its I.P.O. prospectus in April. (Reuters)
• A federal judge has ordered a hearing on April 5 to consider the government’s settlement allowing CVS’s takeover of Aetna to proceed. (Reuters)
• Jamie Dimon of JPMorgan Chase said that European banks need to merge with cross-border rivals to compete globally. (Bloomberg)
• SmileDirectClub, which sells at-home teeth-straightening kits, has reportedly picked JPMorgan to lead its I.P.O. this year. (Axios)
Politics and policy
• The Senate voted to overturn President Trump’s declaration of a national emergency over a border wall. Trump’s response was “VETO!” — which would be the first of his presidency. (NYT, @realDonaldTrump)
• The House voted 420 to 0 to demand that Robert Mueller’s forthcoming report be released publicly. Senator Lindsey Graham, Republican of South Carolina, blocked a similar motion in the Senate. (NYT)
• Treasury Secretary Steven Mnuchin said that he “can’t speculate” on how the White House will respond to Democratic requests for President Trump’s tax returns. (Politico)
• Spotify’s C.E.O. warned that the streaming service would need to raise prices if Apple continues to take a 30 percent fee from companies who use its App Store. Apple said that its policies were fair and that Spotify was trying to bolster its financial results. (FT, NYT)
• Facebook blamed a “server configuration change” for disruption to its services this week — a stark reminder that even powerful internet companies can still be crippled by human error. (NYT)
• The E.U.’s competition commissioner is reportedly set to issue Google with another antitrust fine relating to its AdSense business next week. (FT)
• Huawei’s C.F.O. wanted to quit her job just before she was arrested in Canada, according to the company’s founder. (Reuters)
Best of the rest
• Shares in G.E. jumped 2.8 percent on Thursday despite its warning of falling profits and a description of 2019 as a “reset” year. (WSJ)
• Economists have lowered their forecasts for U.S. employment and economic growth in the first quarter. (WSJ)
• The S.E.C. accused Volkswagen of undertaking a “massive fraud” over its diesel emissions scandal. (NYT)
• How TV shows like “Succession” and “Billions” depict the lifestyle of the 1 percent. (NYT)
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Business News - Opportunities - Reviews