Wall Street Breakfast: Must-Know News
by SA Editor Rachael Granby

Teva said to be Ratiopharm winner. Teva Pharmaceutical (TEVA) has reportedly edged out Pfizer (PFE) and Iceland's Actavis in its bid for Ratiopharm. The companies are close to a formal agreement in which Teva will pay €3.5B ($4.8B) for the German generic-drug maker. TEVA +2.4% premarket (7:00 ET).

Citi's Primerica opts for IPO. Citigroup's (C) Primerica unit filed for an initial public offering of up to $252M. The life insurance unit will sell 18M shares to the public in addition to the 17.2M shares it plans to sell to private equity firm Warburg Pincus. Citigroup, which is trying to offload non-core assets, tried to sell Primerica last year but couldn't find a buyer willing to pay enough. Following the IPO, Citigroup's stake in Primerica will be between 32 and 46 percent, and Citi hopes to divest that stake "as soon as is practicable."

Milan charges banks on derivatives fraud. The City of Milan charged Deutsche Bank (DB), JPMorgan (JPM), UBS (UBS) and Hypo Real Estate with fraud connected to the sale of derivatives. The four firms, 11 bankers and two former city officials will face trial in May for misleading the city on swaps and earning hidden fees. The case could have far broader implications, as prosecutors across Italy are investigating banks that have left local and national government agencies facing potential losses of €2.5B ($3.4B) on derivatives. Premarket: DB -1.2%, JPM -1.2% (7:00 ET).

Apax wants Polycom to go private. Apax Partners is said to be in talks with Polycom (PLCM) to take the video conferencing developer private for more than $3B, or about $37/share. Negotiations have been ongoing since November but deal talks may now fall apart as Polycom's shares have risen more than 40% since discussions between the two sides began. Polycom rose nearly 9% in trading yesterday.

SEC: Lehman oversight a little sloppy. The SEC's Mary Schapiro acknowledged that the agency's oversight of Lehman Brothers (LEHMQ.PK) may have been inadequate during a critical period when the firm may have been hiding its losses. Schapiro said the SEC wasn't aware of an accounting loophole called Repo 105 which allowed Lehman to hide some of the risks it took before it collapsed. The SEC was "ill-suited, because of our disclosure and enforcement mentality, to really convert to being a prudential regulator."

SEC investigates firms' actions pre-meltdown. The SEC's Mary Schapiro confirmed that the agency is investigating the actions of several companies in the lead-up to the financial crisis of 2008. She declined to name specific firms, but said the recently released report on Lehman Brothers' (LEHMQ.PK) failure raised "some very interesting points" and would be helpful in the investigation.

Bernanke, Volcker back Fed bank supervision. Bernanke and Paul Volcker both testified in Congress yesterday. Bernanke urged lawmakers to maintain, or boost, the Federal Reserve's involvement in bank regulation, saying the Fed's role "as lender of last resort, guardian of financial stability, and monetary policymaker" gives it a unique perch from which to monitor risks to firms both large and small and to the broader financial system. Volcker echoed Bernanke's message, saying "there is no other official institution that has the breadth of institutional knowledge, the expertise, and the experience to identify market and institutional vulnerabilities... And the Fed after all, is the only agency that has financial resources at hand in amounts capable of emergency response." A draft bill in the Senate would relegate the Fed to regulating only the largest firms.

Greece may get IMF help in German reversal. In a major reversal for Germany, a government spokesman said Greece should turn to the IMF if it needs aid, and that attempting a Greek rescue without the IMF “would be a very daring experiment.” The comments signal a major rift between Germany's Angela Merkel and European leaders Jean-Claude Trichet, Jean-Claude Juncker and Nicolas Sarkozy. Greece itself said yesterday that it may turn to the IMF for funding help if the rest of the eurozone members don't provide "clear support" next week. The move would be unprecedented for a eurozone member and deeply embarrassing for the bloc. Merkel had also said that expulsion from the eurozone should be a last-resort option for countries that consistently fail to meet the bloc's requirements.

EU countries overly optimistic on budgets. Greece isn't the only European nation in fiscal trouble. The European Commission warned yesterday that Spain, Ireland and France are among the European nations which may miss their budget-deficit targets because they're basing their budget plans on overly-optimistic growth forecasts. The EC has asked several countries for additional details on how they plan to bring their deficits back within EU limits.

CIBC nets subprime suit victory. A U.S. federal judge dismissed a shareholder lawsuit accusing Canadian Imperial Bank of Commerce (CM) and four top executives of misleading investors about its exposure to subprime mortgages. The judge ruled that "CIBC, like so many other institutions, could not have been expected to anticipate the crisis with the accuracy (the) plaintiff enjoys in hindsight."

Wachovia reaches DOJ settlement. Wachovia (WFC) reached a $160M settlement with the Justice Department over charges that a failure in bank controls allowed drug traffickers to launder money. Wachovia "admitted failure to identify, detect, and report suspicious transactions in third-party payment processor accounts," but said it has made significant improvements in its compliance programs since then.

OPEC holds steady. OPEC agreed to keep oil production quotas steady, despite efforts by several members, including Angola and Nigeria, to secure an increase in their output allowances. The group said it won't meet again for seven months, a sign of confidence that crude prices will remain buoyant. Oil rose more than 1% to close near $83/barrel yesterday.

Indian oil pushes for sovereign fund. India's state-owned oil industry is pushing for the creation of India's first sovereign wealth fund, which would be able to compete with China in the race to secure global energy assets. Talks are still at an early stage but any progress in this direction would run counter to an Indian proposal from 2006 for India and China to join forces in bidding for energy projects in order to keep costs down.

Toyota faces racketeering claims. Toyota's potential liability from class-action suits is growing as lawsuits add racketeering claims against the automaker. Toyota is currently facing more than 80 suits in at least 40 states, and the racketeering charges bring the potential liability for Toyota from $2B in damages to more than $10B. Separately, an AP analysis found that the government has received over 100 complaints from drivers who say their recalled Toyotas are still accelerating even after the cars were supposedly fixed.

More pressure on the yuan. China faces additional pressure to let its currency appreciate. Aside from increasingly heated rhetoric coming from the U.S., IMF chief Dominique Strauss-Kahn said yesterday that the yuan is "very much undervalued." World Bank officials, warning that rapid economic growth could cause inflation and asset bubbles, are also pushing China to use its exchange rate to help rebalance its economy. Despite the broad-based calls for an appreciation, some argue that the U.S. is more wrong than China in this case, and that both sides need to be careful to avoid resorting to damaging protectionism. Meanwhile, rumors are flying that China plans to stress test an appreciation of the yuan in certain provinces.

Finra's enforcement chief steps down. Susan Merrill, the head of enforcement at the Financial Industry Regulatory Authority, is stepping down after nearly three years on the job, leaving Finra to find an enforcement chief who can shore up the organization's reputation and bring more cases. In the last three years, Finra's disciplinary actions and fines against the brokerage industry have declined.

The future of phones. Bad news for Google (GOOG), and good news for Sprint (S). Google's trademark application for its Nexus One phone was denied because of "a likelihood of confusion" with a related trademark held by Integra Telecom Inc. Integra currently offers a telecommunications service under the name "Nexus." Google will submit further evidence in support of its application. On a different front, Sprint (S) reportedly plans to introduce the Supersonic, a phone that runs on a 4G network, next week. Sprint is banking on the phone, the first in the U.S. to run on a faster wireless network, to help stem client defections.

Mesa eyes Miramax, but deal's future still unclear. Investment banking firm Mesa Global is said to be among the potential bidders for Disney's (DIS) Miramax film unit. The offer deadline is tomorrow, but sources say a deal may not happen in the near-term because Disney is asking a pricey $650M+ for the unit.