In its second major deal within days, Legg Mason Inc. said it will pay $1.4 billion for Permal Group, a hedge fund based in Paris. The acquisition gives the buyer an immediate 80 percent stake in Permal, with the remaining 20 percent to be transferred over the next four years. Permal has about $20 billion in assets under management. Legg Mason, which is based in Baltimore, also announced last Thursday that it and Citigroup are trading subsidiaries valued at $4 billion.
Citigroup is expected to be fined as much as $45 million this week by Britain's Financial Services Authority for a 2004 deal that netted it a large profit but infuriated rivals and European governments. Citing informed sources, The Observer (London) reported Sunday that the penalty could be a record, topping the $31 million that Royal Dutch/Shell was ordered to pay last year for overstating its oil and gas reserves. Citigroup apologized and suspended several traders for the transaction, in which billions of dollars worth of government bonds were sold off, then repurchased minutes later at lower prices, netting a large profit for the bank. An internal memorandum later came to light describing the strategy as an effort to "eliminate weaker competitors," The Observer said. Two weeks ago, Citigroup agreed to a $2 billion settlement of a class- action lawsuit involving Enron investors. Last year, the bank paid $2.6 billion in a similar settlement with investors in bankrupt WorldCom, now known as MCI.
In a disappointing effort, China Cosco Holdings, one of the world's largest container-shipping companies, raised $1.2 billion from its just-concluded initial public offering, bankers in Hong Kong said. But the income was less than had been hoped for because of investor concerns that excess capacity in the shipping industry may trigger a plunge in shipping rates next year.
The founder of deeply troubled Parmalat and 15 other executives were ordered to stand trial this fall for market-rigging, accounting fraud, and interfering with regulators in the $17 billion scandal that plunged the Italian dairy giant into bankruptcy the week after Christmas 2003. The order also includes Bank of America, the auditing firm Deloitte & Touche, and one other financial institution. A court in Milan is due to rule Tuesday on the request by 11 other people implicated in the scandal to plead guilty in exchange for reduced sentences.