The Lede Blog: Analysis of Armstrong’s Interview With Winfrey

The Lede rounded up online reaction to Lance Armstrong’s interview with Oprah Winfrey on Thursday night in real-time, with additional fact-checking and context provided by Juliet Macur, Sarah Lyall, Brian Stelter, David Carr and Robert Mackey. The second part of the interview is scheduled to be broadcast at 9 p.m. Eastern Time on Friday and will be streamed live on the Oprah Winfrey Network’s Web site.

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DealBook: Report Details Missteps in Trading at JPMorgan

Long seen as one of the most careful banks on Wall Street, JPMorgan Chase on Wednesday drew back a curtain on a rare breakdown, showing traders acting on their own and concealing losses while managers seemingly turned a blind eye.

In a 129-page internal report dissecting a bad bet on credit derivatives that cost the bank more than $6 billion, the bank confessed, in painstaking detail, to widespread “failures.”

Yet the report, written by a JPMorgan management task force, is not the final word on the trading blunder. Federal investigators are examining whether fraud was committed and are planning to use the report as a guide for pursuing their inquiries, say officials briefed on the matter.

The report describes traders making overly optimistic estimates of their losses, but stops short of claiming outright fraud. Showing that traders crossed a legal line presents a challenge for investigators. In some derivatives markets, traders are afforded flexibility to estimate the value of their positions.

But the F.B.I., suspecting that some employees intentionally hid the losses last year, is using taped phone conversations to build criminal cases against London-based traders involved in the debacle, according to the officials briefed on the matter. And the report could help that effort, the officials said. Authorities expect to interview one of the junior traders in the coming weeks, one official said.

Congress is exploring potential wrongdoing, as well. The Permanent Subcommittee on Investigations has taken testimony, people close to the inquiry said, from Jamie Dimon, the bank’s chief executive, and Ina R. Drew, the former leader of the chief investment office,where the trading losses occurred.

The subcommittee’s investigation has already complicated things for the bank. It is rare for a bank to expose its missteps so publicly, but JPMorgan knew that the subcommittee would have eventually received the document from regulators and made it public.

The regulators at the Office of the Comptroller of the Currency, the people close to the inquiry said, are required to turn over such documents under a subpoena they received from the subcommittee. So last fall, a person close to JP Morgan said, the bank decided to release the report on its own terms.

“This was getting out there anyway,” another person close to the situation said. This person and others interviewed for this article spoke on the condition of anonymity because the details of the case are not public.

Federal authorities responded positively to the internal report. One Congressional official privately told JPMorgan that the bank was wise to release such a detailed document, one person briefed on the matter said, while some regulators at the comptroller’s office praised it as an “important step” for corporate governance.

The report centered on a breakdown at the chief investment office in London, a group created to invest JPMorgan’s own money and offset potential losses across the bank’s disparate businesses.

JPMorgan’s troubles began in January 2012, when the investment office ignored the basic rules of trading. On a well-functioning Wall Street desk, traders are told to end a deeply vulnerable position early, even if it means sustaining some minor losses.

But under Ms. Drew, the report said, JPMorgan traders did the opposite. In response to adverse moves in the markets and regulatory changes, the group made a series of aggressive derivatives trades. As these bets began to sour, the London team increased their trades rather than exiting. The traders thought that reducing the assets was too costly, the report says.

Some questioned the strategy. By the end of January, one trader became deeply unnerved. In an e-mail to a more senior trader, he said the size of the trades were becoming “scary” and advised that the unit take the “full pain” now.

But the traders “continued to build the notional size of the positions through late March,” according to the report, which was led by Michael J. Cavanagh, the bank’s co-head of corporate and investment banking.

In an April e-mail, Mr. Dimon asked JPMorgan’s chief risk officer, John Hogan, why the chief investment office hadn’t simply cut some of its positions to reduce risk. The office, Mr. Hogan replied, indicated that adding positions was the “most ‘efficient’ way to do it.”

The report does not name the architects of the trade; British privacy laws prevented it from doing so. But they are known to be Javier Martin-Artajo, a manager who oversaw the trading strategy from the bank’s London offices; Bruno Iksil, the trader known as the London Whale for placing the outsize bet; and Achilles Macris, the executive in charge of the international chief investment office. None of the employees have been accused of any wrongdoing. They have all since departed the bank.

The JPMorgan report, while taking aim at the London office’s strategy, also exposes major gaps in oversight that allowed this headstrong team of traders to carry out their wager. Ms. Drew, who helped steer the bank through the financial crisis, received the brunt of the blame.

“Ina Drew failed in three critical areas,” the report said, pointing to lax controls and a failure to ensure that her team “understood and vetted” the trade.

The management missteps also ensnared Barry L. Zubrow, a former chief risk officer, and Douglas L. Braunstein, formerly the bank’s chief financial officer but now a vice chairman at the bank. While the report acknowledged that Mr. Dimon could “appropriately rely upon” senior managers who oversaw the trading strategy, it also concluded that he “could have better tested his reliance on what he was told.”

This slipshod culture magnified the impact of simple human errors across the bank. At one point, the mathematical mistakes of an employee in London prevented others in the bank from seeing the potential losses accumulating beneath the surface.

Still, the problems lurking in the investment office should have set off alarms for executives outside the office. The report reveals, however, that the bank dismantled its early-warning system.

The investment office’s alarm system, based on a computer model, showed risk limits were exceeded in late January, according to the report. Senior executives made a temporary exemption for the investment office, which was approved by Mr. Dimon and others. But then, the bank introduced a new model that underestimated the losses building in the investment office, and allowed the traders to fly below the bank’s internal risk radar.

The flawed model, the report says, was built by a London-based mathematician who also provided analysis to the investment office’s traders. It appears the employee, who built the model with a simple spreadsheet, was out of his depth. The model wasn’t properly back-tested and contained errors, the report said.

JPMorgan’s report raises the possibility that the investment office pressured the managers to approve the new model. The model-builder received an e-mail on Jan. 23 from the trader to whom he reported, saying that he should “keep the pressure on our friends” in a group that validated models.

The public disclosures by the bank also came under scrutiny in the report. Failure to properly report trading losses could make JPMorgan vulnerable to lawsuits from investors. The bank’s disclosures are the subject of the Congressional investigation and an inquiry from the Securities and Exchange Commission.

The problem stems in part from the London traders, who underestimated the size of their losses, a misstep that has drawn the scrutiny of the F.B.I. and federal prosecutors. The bank restated its first-quarter results to reflect that the traders may have masked their losses by $459 million.

“In the course of the task force’s ensuing work, it became aware of evidence — primarily in the form of electronic communications and taped conversations — that raised questions about the integrity of the marks,” the report said.

Still, obstacles remain for a criminal prosecution. Authorities planned to interview Mr. Macris in his native Greece, but the talks have broken down. Instead, officials said, they now expect to interview a lower-level employee.

Some people close to the investigation also note that traders have some leeway when marking the value of trades. And the internal report shows how JPMorgan, after consulting its auditor, PricewaterhouseCoopers, approved the investment office’s valuations of its trades.

The report highlighted an episode that, in theory, might have made JPMorgan think twice before initially signing off on the first-quarter results. An “internal audit group” identified deficiencies in the unit that double-checked its traders’ valuations, calling out the group last March with a simple concern: it “needs improvement.”

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Some With Autism Diagnosis Can Recover, Study Finds

Doctors have long believed that disabling autistic disorders last a lifetime, but a new study has found that some children who exhibit signature symptoms of the disorder recover completely.

The study, posted online on Wednesday by the Journal of Child Psychology and Psychiatry, is the largest to date of such extraordinary cases and is likely to alter the way that scientists and parents think and talk about autism, experts said.

Researchers on Wednesday cautioned against false hope. The findings suggest that the so-called autism spectrum contains a small but significant group who make big improvements in behavioral therapy for unknown, perhaps biological reasons, but that most children show much smaller gains. Doctors have no way to predict which children will do well.

Researchers have long known that between 1 and 20 percent of children given an autism diagnosis no longer qualify for one a few years or more later. They have suspected that in most cases the diagnosis was mistaken; the rate of autism diagnosis has ballooned over the past two decades, and some research suggests that it has been loosely applied.

The new study should put some of that skepticism to rest.

“This is the first solid science to address this question of possible recovery, and I think it has big implications,” said Sally Ozonoff of the MIND Institute at the University of California, Davis, who was not involved in the research. “I know many of us as would rather have had our tooth pulled than use the word ‘recover,’ it was so unscientific. Now we can use it, though I think we need to stress that it’s rare.”

She and other experts said the findings strongly supported the value of early diagnosis and treatment.

In the study, a team led by Deborah Fein of the University of Connecticut at Storrs recruited 34 people who had been diagnosed before the age of 5 and no longer had any symptoms. They ranged in age from 8 to 21 years old and early in their development were in the higher-than-average range of the autism spectrum. The team conducted extensive testing of its own, including interviews with parents in some cases, to gauge current social and communication skills.

The debate over whether recovery is possible has simmered for decades and peaked in 1987, when the pioneering autism researcher O. Ivar Lovaas reported that 47 percent of children with the diagnosis showed full recovery after undergoing a therapy he had devised. This therapy, a behavioral approach in which increments of learned skills garner small rewards, is the basis for the most effective approach used today; still, many were skeptical and questioned his definition of recovery.

Dr. Fein and her team used standardized, widely used measures and found no differences between the group of 34 formerly diagnosed people and a group of 34 matched control subjects who had never had a diagnosis.

“They no longer qualified for the diagnosis,” said Dr. Fein, whose co-authors include researchers from Queens University in Kingston, Ontario; Children’s Hospital of Philadelphia; the Institute of Living in Hartford; and the Child Mind Institute in New York. “I want to stress to parents that it’s a minority of kids who are able to do this, and no one should think they somehow missed the boat if they don’t get this outcome.”

On measures of social and communication skills, the recovered group scored significantly better than 44 peers who had a diagnosis of high-functioning autism or Asperger’s syndrome.

Dr. Fein emphasized the importance of behavioral therapy. “These people did not just grow out of their autism,” she said. “I have been treating children for 40 years and never seen improvements like this unless therapists and parents put in years of work.”

The team plans further research to learn more about those who are able to recover. No one knows which ingredients or therapies are most effective, if any, or if there are patterns of behavior or biological markers that predict such success.

“Some children who do well become quite independent as adults but have significant anxiety and depression and are sometimes suicidal,” said Dr. Fred Volkmar, the director of the Child Study Center at the Yale University School of Medicine. There are no studies of this group, he said.

That, because of the new study, is about to change.

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Some With Autism Diagnosis Can Recover, Study Finds

Doctors have long believed that disabling autistic disorders last a lifetime, but a new study has found that some children who exhibit signature symptoms of the disorder recover completely.

The study, posted online on Wednesday by the Journal of Child Psychology and Psychiatry, is the largest to date of such extraordinary cases and is likely to alter the way that scientists and parents think and talk about autism, experts said.

Researchers on Wednesday cautioned against false hope. The findings suggest that the so-called autism spectrum contains a small but significant group who make big improvements in behavioral therapy for unknown, perhaps biological reasons, but that most children show much smaller gains. Doctors have no way to predict which children will do well.

Researchers have long known that between 1 and 20 percent of children given an autism diagnosis no longer qualify for one a few years or more later. They have suspected that in most cases the diagnosis was mistaken; the rate of autism diagnosis has ballooned over the past two decades, and some research suggests that it has been loosely applied.

The new study should put some of that skepticism to rest.

“This is the first solid science to address this question of possible recovery, and I think it has big implications,” said Sally Ozonoff of the MIND Institute at the University of California, Davis, who was not involved in the research. “I know many of us as would rather have had our tooth pulled than use the word ‘recover,’ it was so unscientific. Now we can use it, though I think we need to stress that it’s rare.”

She and other experts said the findings strongly supported the value of early diagnosis and treatment.

In the study, a team led by Deborah Fein of the University of Connecticut at Storrs recruited 34 people who had been diagnosed before the age of 5 and no longer had any symptoms. They ranged in age from 8 to 21 years old and early in their development were in the higher-than-average range of the autism spectrum. The team conducted extensive testing of its own, including interviews with parents in some cases, to gauge current social and communication skills.

The debate over whether recovery is possible has simmered for decades and peaked in 1987, when the pioneering autism researcher O. Ivar Lovaas reported that 47 percent of children with the diagnosis showed full recovery after undergoing a therapy he had devised. This therapy, a behavioral approach in which increments of learned skills garner small rewards, is the basis for the most effective approach used today; still, many were skeptical and questioned his definition of recovery.

Dr. Fein and her team used standardized, widely used measures and found no differences between the group of 34 formerly diagnosed people and a group of 34 matched control subjects who had never had a diagnosis.

“They no longer qualified for the diagnosis,” said Dr. Fein, whose co-authors include researchers from Queens University in Kingston, Ontario; Children’s Hospital of Philadelphia; the Institute of Living in Hartford; and the Child Mind Institute in New York. “I want to stress to parents that it’s a minority of kids who are able to do this, and no one should think they somehow missed the boat if they don’t get this outcome.”

On measures of social and communication skills, the recovered group scored significantly better than 44 peers who had a diagnosis of high-functioning autism or Asperger’s syndrome.

Dr. Fein emphasized the importance of behavioral therapy. “These people did not just grow out of their autism,” she said. “I have been treating children for 40 years and never seen improvements like this unless therapists and parents put in years of work.”

The team plans further research to learn more about those who are able to recover. No one knows which ingredients or therapies are most effective, if any, or if there are patterns of behavior or biological markers that predict such success.

“Some children who do well become quite independent as adults but have significant anxiety and depression and are sometimes suicidal,” said Dr. Fred Volkmar, the director of the Child Study Center at the Yale University School of Medicine. There are no studies of this group, he said.

That, because of the new study, is about to change.

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DealBook: H.P. Said to Have Suitors for Two Units

Hewlett-Packard has received a number of inquiries from would-be buyers for its Autonomy and Electronic Data Systems units in recent weeks, though the technology company isn’t interested in selling at the moment, a person briefed on the matter said on Wednesday.

The volume of calls from potential suitors and bankers picked up after H.P. filed its annual report with regulators on Dec. 28, this person said. In the securities filing, the company said, “We also continue to evaluate the potential disposition of assets and businesses that may no longer help us meet our objectives.”

That is fairly standard legal boilerplate. But H.P. has been struggling with poor performance at both Autonomy and E.D.S., having significantly written down the value of those acquisitions. The company has also claimed to have found accounting and disclosure issues at Autonomy, and has forwarded findings from an internal inquiry to securities regulators in the United States and the division’s home in Britain.

Some of the expressions of interest may also have arisen amid the sudden flurry of news coverage surrounding a potential leveraged buyout of Dell.

Still, H.P.’s management team, led by its chief executive, Meg Whitman, is not interested in selling what it considers to be “core” businesses. The company is focused on growing its enterprise business, which sells software and services to corporate clients.

Shares in H.P. were up 3 percent by late afternoon on Wednesday, to $17.03, after The Wall Street Journal reported news of the inquiries. The company’s stock remains down some 35 percent for the last 12 months.

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World Briefing | Middle East: Jordan: Fire Kills Family at Camp for Syrian Refugees

A fire caused by a kerosene heater that flipped over in a center for refugees who had fled the Syrian civil war killed seven members of a family, a civil defense spokesman said Wednesday. The center is a temporary shelter for refugees before they are moved to a camp called Zaatari, which has been battered by a flash flood.

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Boeing 787s Are Grounded by Japanese Airlines

TOKYO — Japan’s two largest airlines said Wednesday they would ground their fleets of Boeing’s new 787 aircraft, the Dreamliner, after one operated by All Nippon Airways made an emergency landing in western Japan.

The 137 passengers and crew used emergency slides to exit the aircraft after possible battery trouble and smoke forced the ANA flight to Tokyo from Ube in western Japan to land at Takamatsu airport in southern Japan instead, according to the public broadcaster, NHK. One elderly passenger suffered a slight hip injury during the evacuation, NHK said.

The emergency landing comes after a string of problems in the last month with the aircraft, including a battery fire, fuel leaks, and a cracked cockpit window.

All Nippon said after Wednesday’s incident that it was grounding all 17 of its Dreamliners for inspections. Japan Airlines said it would also temporarily ground the five Boeing 787s it still operates; two others are already undergoing safety checks.

Akihiro Ota, Japan’s transportation minister, said the emergency landing raised concerns over the Dreamliner’s safety, and that he would dispatch safety officials to investigate. “I see this as a serious incident which could have led to a serious accident,” Mr. Ota told reporters in Tokyo.

All Nippon’s vice president, Osamu Shinobe, told a reporters at a news conference at Tokyo’s Haneda Airport, “I apologize for the grave concern and trouble we have caused our passengers, their families and others.” He said the airline was still investigating.

Federal authorities in the United States have also voiced concern about problems the new aircraft has faced but still endorsed it as a safe airplane.

The Federal Aviation Administration last week ordered a comprehensive review of the 787’s manufacturing and design, with a special focus on the plane’s electrical systems. But in a news conference last Thursday, the Transportation Secretary, Ray LaHood, made no mention of a possible grounding of 787s.

Still, the review is unusual and comes 15 months after the 787 entered service after a lengthy certification process by the F.A.A. It comes during a formal investigation by the National Transportation Safety Board into what caused a battery fire in a Japan Airlines plane that had flown to Boston from Tokyo last week.

Late Tuesday in Tokyo, the N.T.S.B. said it was “currently in the process of gathering information about the B-787 emergency landing in Japan earlier today."

Eight airlines now fly the 787: All Nippon Airways and Japan Airlines in Japan currently own 24 of the 50 delivered by Boeing since November 2011. The other operators are Air India, Ethiopian Airlines, Chile’s LAN Airlines, Poland’s LOT, Qatar Airways and United Airlines.

Boeing has sought to ease concerns about the plane’s design and reliability, and insisted it was no more trouble-prone than other new commercial airplane programs. The 787 relies more on electrical systems than previous generations of airplanes. Electrical systems, not mechanical ones, operate hydraulic pumps, de-ice the wings, pressurize the cabin and handle other tasks. The plane also has electric brakes instead of hydraulic ones.

While problems are common with early models — including with the first Airbus A380, the Boeing 777 or even the first 747s — analysts say the issue could become a growing embarrassment for Boeing if travelers or airlines begin to lose confidence in the plane.

So far, safety experts said that the problems with the 787 pointed more to teething problems than structural faults. But the problem is more than just one of reputation for Boeing: the plane maker has said it expects to sell 5,000 787s in the next 20 years, but analysts believe it will be years before it breaks even because of delays.

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Breaking Link of Violence and Mental Illness

No one but a deeply disturbed individual marches into an elementary school or a movie theater and guns down random, innocent people.

That hard fact drives the public longing for a mental health system that produces clear warning signals and can somehow stop the violence. And it is now fueling a surge in legislative activity, in Washington and New York.

But these proposed changes and others like them may backfire and only reveal how broken the system is, experts said.

“Anytime you have one of these tragic cases like Newtown, it’s going to expose deficiencies in the mental health system, and provide some opportunity for reform,” said Richard J. Bonnie, a professor of public policy at the University of Virginia’s law school who led a state commission that overhauled policies after the 2007 Virginia Tech shootings that left 33 people dead. “But you have to be very careful not to overreact.”

New York State legislators on Tuesday passed a gun bill that would require therapists to report to the authorities any client thought to be “likely to engage in” violent behavior; under the law, the police would confiscate any weapons the person had.

And in Washington, lawmakers said that President Obama was considering a range of actions as part of a plan to reduce gun violence, including more sharing of records between mental health and law enforcement agencies.

The White House plan to make use of mental health data was still taking shape late Tuesday. But several ideas being discussed — including the reporting provision in the New York gun law — are deeply contentious and transcend political differences.

Some advocates favored the reporting provision as having the potential to prevent a massacre. Among them was D. J. Jaffe, founder of the Mental Illness Policy Org., which pushes for more aggressive treatment policies. Some mass killers “were seen by mental health professionals who did not have to report their illness or that they were becoming dangerous and they went on to kill,” he said.

Yet many patient advocates and therapists strongly disagreed, saying it would intrude into the doctor-patient relationship in a way that could dissuade troubled people from speaking their minds, and complicate the many judgment calls therapists already have to make.

The New York statute requires doctors and other mental health professionals to report any person who “is likely to engage in conduct that would result in serious harm to self or others.”

Under current ethical guidelines, only involuntary hospitalizations (and direct threats made by patients) are reported to the authorities. These reports then appear on a federal background-check database. The new laws would go further.

“The way I read the new law, it means I have to report voluntary as well as involuntary hospitalizations, as well as many people being treated for suicidal thinking, for instance, as outpatients,” said Dr. Paul S. Appelbaum, director of the Division of Law, Ethics, and Psychiatry at Columbia University’s medical school. “That is a much larger group of people than before, and most of whom will never be a serious threat to anyone.”

One fundamental problem with looking for “warning signs” is that it is more art than science. People with serious mental disorders, while more likely to commit aggressive acts than the average person, account for only about 4 percent of violent crimes over all.

The rate is higher when it comes to rampage or serial killings, closer to 20 percent, according to Dr. Michael Stone, a New York forensic psychiatrist who has a database of about 200 mass and serial killers. He has concluded from the records that about 40 were likely to have had paranoid schizophrenia or severe depression or were psychopathic, meaning they were impulsive and remorseless.

“But most mass murders are done by working-class men who’ve been jilted, fired, or otherwise humiliated — and who then undergo a crisis of rage and get out one of the 300 million guns in our country and do their thing,” Dr. Stone said.

The sort of young, troubled males who seem to psychiatrists most likely to commit school shootings — identified because they have made credible threats — often do not qualify for any diagnosis, experts said. They might have elements of paranoia, of deep resentment, or of narcissism, a grandiose self-regard, that are noticeable but do not add up to any specific “disorder” according to strict criteria.

Read More..

Breaking Link of Violence and Mental Illness

No one but a deeply disturbed individual marches into an elementary school or a movie theater and guns down random, innocent people.

That hard fact drives the public longing for a mental health system that produces clear warning signals and can somehow stop the violence. And it is now fueling a surge in legislative activity, in Washington and New York.

But these proposed changes and others like them may backfire and only reveal how broken the system is, experts said.

“Anytime you have one of these tragic cases like Newtown, it’s going to expose deficiencies in the mental health system, and provide some opportunity for reform,” said Richard J. Bonnie, a professor of public policy at the University of Virginia’s law school who led a state commission that overhauled policies after the 2007 Virginia Tech shootings that left 33 people dead. “But you have to be very careful not to overreact.”

New York State legislators on Tuesday passed a gun bill that would require therapists to report to the authorities any client thought to be “likely to engage in” violent behavior; under the law, the police would confiscate any weapons the person had.

And in Washington, lawmakers said that President Obama was considering a range of actions as part of a plan to reduce gun violence, including more sharing of records between mental health and law enforcement agencies.

The White House plan to make use of mental health data was still taking shape late Tuesday. But several ideas being discussed — including the reporting provision in the New York gun law — are deeply contentious and transcend political differences.

Some advocates favored the reporting provision as having the potential to prevent a massacre. Among them was D. J. Jaffe, founder of the Mental Illness Policy Org., which pushes for more aggressive treatment policies. Some mass killers “were seen by mental health professionals who did not have to report their illness or that they were becoming dangerous and they went on to kill,” he said.

Yet many patient advocates and therapists strongly disagreed, saying it would intrude into the doctor-patient relationship in a way that could dissuade troubled people from speaking their minds, and complicate the many judgment calls therapists already have to make.

The New York statute requires doctors and other mental health professionals to report any person who “is likely to engage in conduct that would result in serious harm to self or others.”

Under current ethical guidelines, only involuntary hospitalizations (and direct threats made by patients) are reported to the authorities. These reports then appear on a federal background-check database. The new laws would go further.

“The way I read the new law, it means I have to report voluntary as well as involuntary hospitalizations, as well as many people being treated for suicidal thinking, for instance, as outpatients,” said Dr. Paul S. Appelbaum, director of the Division of Law, Ethics, and Psychiatry at Columbia University’s medical school. “That is a much larger group of people than before, and most of whom will never be a serious threat to anyone.”

One fundamental problem with looking for “warning signs” is that it is more art than science. People with serious mental disorders, while more likely to commit aggressive acts than the average person, account for only about 4 percent of violent crimes over all.

The rate is higher when it comes to rampage or serial killings, closer to 20 percent, according to Dr. Michael Stone, a New York forensic psychiatrist who has a database of about 200 mass and serial killers. He has concluded from the records that about 40 were likely to have had paranoid schizophrenia or severe depression or were psychopathic, meaning they were impulsive and remorseless.

“But most mass murders are done by working-class men who’ve been jilted, fired, or otherwise humiliated — and who then undergo a crisis of rage and get out one of the 300 million guns in our country and do their thing,” Dr. Stone said.

The sort of young, troubled males who seem to psychiatrists most likely to commit school shootings — identified because they have made credible threats — often do not qualify for any diagnosis, experts said. They might have elements of paranoia, of deep resentment, or of narcissism, a grandiose self-regard, that are noticeable but do not add up to any specific “disorder” according to strict criteria.

Read More..

News Analysis: Momentum Seems to Build for Gargantuan Buyout of Dell

Dell is advancing toward a goal many thought was all but unattainable since the financial crisis: a leveraged buyout worth more than $20 billion.

The company is in talks with investment firms and its founder, Michael S. Dell, over a deal that would take the technology company off the public markets, people briefed on the matter said on Tuesday.

One potential transaction that appears to be gaining steam is one that would be led by Silver Lake, a private equity firm that focuses on technology deals, one of these people said. The investment shop has already tasked a number of banks — Bank of America Merrill Lynch, Barclays, Credit Suisse and Royal Bank of Canada — with lining up the enormous amount of financing that would be needed, perhaps as much as $16 billion.

Silver Lake is also sounding out potential partners that could help contribute equity financing for the deal, a group that may include wealthy Asian investors, this person said.

Dell is contemplating using some of its enormous store of cash, totaling about $11.3 billion as of Nov. 2, to help defray the deal’s cost. It may do so even though more than 80 percent of its cash is held overseas, and bringing it home could generate a big tax penalty.

Mr. Dell is expected to contribute his roughly 16 percent stake in the company to the deal, helping to lower the ultimate price tag. His shares as of Tuesday’s market close were worth about $3.6 billion. It is unclear whether he would invest additional money as part of a buyout.

Nonetheless, the deal talks appear to have momentum, although one of the people briefed on the matter cautioned that they could still fall apart.

Representatives for Dell, Silver Lake and the banks declined to comment.

Should a deal come together, it would be the most radical step yet to revive a company once so profitable that it gave rise to a class of “Dellionaires” during the Internet boom.

Mr. Dell, who founded the computer maker in his dorm room in 1984, has long cast about for a solution to a world where revenue from personal computer sales has consistently fallen in recent years.

Behind any move to take Dell private is the hope that, freed from the tough scrutiny of public shareholders, the company can continue moving into the more lucrative and stable market of providing hardware and software services for corporations.

The company’s stock had fallen nearly 48 percent in the five years through last Friday, the day before Bloomberg News reported Dell’s talks with private equity firms. Since then, the stock price has climbed 21 percent.

A leveraged buyout of Dell would be one of the biggest private equity transactions since the Blackstone Group acquired Hilton Hotels for $25 billion more than five years ago. To date, no leveraged buyout announced since the financial crisis has surpassed the $7.2 billion that Kohlberg Kravis Roberts and others paid for the Samson Investment Company, an oil and gas driller, in fall 2011.

In part, that has been a matter of logistics. Leveraged buyouts require private equity firms to put money down, much as borrowers do for a mortgage. On average, that amount has been around 30 percent of the overall deal price, meaning that the equity required for a Dell takeover could be significant.

That is why Silver Lake is seeking to bring in at least one partner to help buoy a bid, one of the people briefed on the matter said.

But private equity firms have also taken pains to avoid club deals, in which two or more of them partner together to buy a company. Investors in these firms have complained that the practice essentially multiplies their exposure to a particular transaction.

Private equity firms aren’t fond of them because they essentially erase the distinctions between competitors, potentially making it harder to raise money for new funds.

Any deal would also require a seemingly daunting amount of debt financing, raised from bank loans and junk-bond sales. Several deal makers have expressed confidence in their ability to raise that money, given a hunger among investors for bonds that yield even a few percentage points more than Treasury bonds.

The co-head of JPMorgan Chase‘s global debt capital markets, Jim Casey, told CNBC in October that his firm could raise $15 billion to $25 billion in noninvestment-grade debt for a single transaction.

Some of the other obstacles to a Dell takeover lie specifically with the company. It already bears $4.9 billion in long-term debt — and that is before it assumes the enormous amount that would come from a private equity deal.

While Dell still reports a healthy amount of cash from operations, totaling $3.7 billion for the year ended Nov. 2, much of that could be consumed with paying down debt. A. M. Sacconaghi, an analyst with Sanford C. Bernstein, estimated on Tuesday that the company could pay about $820 million in interest payments each year.

Analysts have questioned whether a private Dell would have the capital to pay for acquisitions, which has been an important vehicle for expanding into new markets. Last year alone, the company struck 10 deals, including the $2.4 billion purchase of Quest Software.

“With a large debt load, we believe Dell would have a more difficult time acquiring smaller enterprise companies — making it harder to diversify away from PCs,” analysts with Barclays wrote in a research note on Tuesday.

“We would be quite surprised if a transaction would take place.”

Ben Protess contributed reporting.

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