DealBook: Investor, Bettor, Golfer: Insider Trading Inquiry Includes Mickelson, Icahn and William T. Walters

The divergent lives of a championship golfer, a high-rolling gambler and a billionaire investor have collided in a federal insider trading investigation.

Federal authorities are examining a series of well-timed trades made by the golfer Phil Mickelson and the gambler William T. Walters, people briefed on the investigation said, focusing on trading in two different stocks. The authorities are also questioning what role, if any, the investor Carl C. Icahn may have had in sharing information about one of the stocks: the consumer products company Clorox.

Mr. Mickelson, a three-time winner of the Masters golf tournament and one of the country's highest-earning athletes, placed his Clorox trade in 2011, the people briefed on the investigation said. Mr. Walters, an owner of golf courses who is often considered the most successful sports bettor in the country, made a similar trade about that time, the people added.

Mr. Icahn, a 78-year-old billionaire and one of the best-known investors in the world, was mounting a takeover bid for Clorox around the time that Mr. Mickelson and Mr. Walters placed their trades.

The F.B.I. and Securities and Exchange Commission, which are leading the inquiry along with federal prosecutors in Manhattan, are examining whether Mr. Icahn leaked details of his Clorox bid to Mr. Walters, the people briefed on the investigation said. One theory, the people said, is that Mr. Walters might have passed that information to Mr. Mickelson.

Around the time of the trading, the S.E.C. sent Mr. Icahn a routine request for information about his dealings in Clorox, the people briefed on the matter said. Federal authorities, whose investigation has dragged on for more than two years without yielding definitive evidence of insider trading, are also examining phone records to see whether Mr. Walters spoke to Mr. Icahn shortly before the trades. Mr. Icahn's bid for Clorox ultimately failed. Mr. Mickelson, Mr. Walters and Mr. Icahn have not been accused of any wrongdoing. Mr. Icahn, even if he did leak secret information about his firm's intentions with Clorox, may have done so legally. It would be illegal if he breached a duty of confidentiality to his own investors.

In a separate strand of the investigation, federal authorities are looking into trading in Dean Foods that has no apparent connection to Mr. Icahn, the people briefed on the matter said. Mr. Walters and Mr. Mickelson placed the trades around August 2012, according to the people, just before the food and beverage company announced its quarterly earnings and a public offering of stock for one of its subsidiaries. The authorities are investigating whether Mr. Walters had a source inside the company itself — and whether others who know Mr. Walters may have traded on the information as well.

Mr. Walters, reached on Friday evening, said, "While I don't have any comment, pal, I'll talk to you later."

In an interview, Mr. Icahn said "I don't give out inside information," adding that "for 50 years I have had an unblemished record." Mr. Icahn, who acknowledged knowing Mr. Walters but said he never met or spoke to Mr. Mickelson, argued that any suggestion he did anything wrong is "irresponsible."

Representatives for Mr. Mickelson did not respond to a request for comment. Federal authorities declined to comment.

For two years, authorities had little to go on besides trading records and a hunch. Then last year, F.B.I. agents approached Mr. Mickelson at Teterboro Airport in New Jersey, one of the people briefed on the matter said, asking the celebrity golfer to discuss his trading.

It is unclear whether Mr. Mickelson knows Mr. Icahn or provided any evidence implicating him or Mr. Walters in the trading. It is possible that the investigations will not produce any charges.

But if the investigation proceeds, it could undermine the reputation of one of America's most popular athletes in Mr. Mickelson, who has won five major championships over a two-decade career. And for Mr. Icahn, the investigation might complicate one of the longest running and most successful careers on Wall Street.

Mr. Icahn made his foray into finance as a stockbroker in the 1960s. He later became a professional agitator, haranguing the country's biggest companies to give him a board seat.

Long before activist investing was in vogue, Mr. Icahn was waging war with executives at companies like Motorola, RJR Nabisco and United States Steel, pushing for corporate changes to increase shareholder value. In the 1980s, Mr. Icahn became synonymous with an era of corporate raiding, leading a hostile takeover of Trans World Airlines.

In recent years, his strategy has mellowed some. Mr. Icahn has become something of an elder statesman on Wall Street, often appearing on the CNBC business channel, at investing conferences and even on Twitter, though he continues to pursue headline-grabbing takeover bids for companies like Clorox.

Mr. Icahn laid the groundwork for a Clorox takeover in early 2011, when he disclosed in a regulatory filing that his various investment firms began amassing shares in the consumer goods manufacturer, thinking the stock was undervalued. Shares of Clorox rose about 6 percent in February 2011, after Mr. Icahn disclosed his stake.

The shares jumped again a few months later after he announced an unsolicited takeover bid for the company. In a letter to Clorox, Mr. Icahn proposed buying the company for $76.50 a share and noted that his firms were Clorox's largest investor.

In the days leading up to Mr. Icahn's bid, there was unusual trading activity in shares of Clorox and options to buy the stock, according to published reports at the time. Successful options trading that comes ahead of corporate deals can be a red flag for regulators.

The investigation into the Clorox trading began at the Financial Industry Regulatory Authority, or Finra, Wall Street's self-regulatory group that monitors suspicious trades. In 2011, the people briefed on the matter said, Finra traced a series of well-timed Clorox trades to Mr. Walters and Mr. Mickelson, just as Mr. Icahn was aiming to gain a foothold on the company's board.

Ultimately, Clorox rebuffed Mr. Icahn's overture. By September 2011, Mr. Icahn withdrew the bid.

Because the bid failed, it is unclear what inside information, if any, Mr. Icahn may have been privy to other than the trading strategy of his own firm, Icahn Enterprises. If Mr. Icahn provided Mr. Walters a heads-up about his activities in connection with the takeover bid, it is not necessarily a violation. Under the laws that govern insider trading, it is not illegal to leak secret information about a future trade.

For such a leak to be illegal, Mr. Icahn most likely would have had to breach a duty to keep the information confidential. Since Mr. Icahn never joined the Clorox board, he probably owed no duty to the company or its shareholders.

Yet if any potential bidder for Clorox breached a duty of confidentiality to his or her own investors, then that could present a legal problem. And in certain cases, even if there is no duty of confidentiality, a little-known securities rule might prevent someone who is mounting a takeover bid to leak "material, nonpublic information" about the offer.

It is unclear how well acquainted Mr. Icahn and Mr. Walters are, but they have crossed paths in Las Vegas. Mr. Icahn is no stranger to the city. Over the years, Mr. Icahn has invested in Las Vegas real estate and is chairman of Tropicana Entertainment, a casino company based in the city. Regulatory filings also show that a small Nevada company controlled by Mr. Walters and his business partner was an early investor in the mobile data provider Voltari, whose largest shareholders include Mr. Icahn's investment firms.

Mr. Mickelson and Mr. Walters have participated in the Pebble Beach Pro Am golf tournament during which professional golfers partner with amateurs and celebrities. Mr. Walters won the tournament in 2008.

Mr. Walters, better known as Billy, has drawn federal scrutiny off and on for years. In 1992, he was acquitted of illegal gambling charges. Years later, the Nevada attorney general charged Mr. Walters with money laundering stemming from his gambling operation. The case resulted in three indictments; courts dismissed each one.

Despite the scrutiny, Mr. Walters firmly belongs to the Las Vegas elite, a generous philanthropist who epitomizes the city's unconventional brand of capitalism. He bought up golf courses — his Bali Hai Golf Club has hosted what it calls the "sexiest golf tournament" in the world, featuring female caddies — and auto dealerships. He also helped finance political campaigns.

In 2011, "60 Minutes" captured Mr. Walters's high-roller status. The anchor, Lara Logan, remarked that "It's hard to find anyone better at winning than Billy Walters."

But during the segment, Mr. Walters complained that his stock picks had not fared as well as his sports bets. He discussed how the worst "crooks" he met were on Wall Street, not in the casinos or betting parlors, mentioning that the most money he lost was on stocks like Enron.

Alexandra Stevenson, Azam Ahmed and Peter J. Henning contributed reporting.

A version of this article appears in print on 05/31/2014, on page A1 of the NewYork edition with the headline: Investor, Bettor, Golfer: Inquiry Into Big Names .

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DealBook: Pfizer Abandons Bid for AstraZeneca

Updated, 9:36 p.m. | On the final day for Pfizer to decide whether to abandon the plan, it said it did not intend to make an offer for AstraZeneca. Last week, the British company rejected what Pfizer had called its final offer. The cash-and-stock bid, which valued AstraZeneca at about $119 billion, would have created the world's largest drug company.

Pfizer had indicated that it would not pursue a hostile bid, which would have allowed AstraZeneca's shareholders to vote on the deal without the approval of AstraZeneca's board. Under British takeover rules, Pfizer is not permitted to make another offer for AstraZeneca for six months. If AstraZeneca's board were to agree to talks, the earliest Pfizer could offer a higher price would be in three months.

"We continue to believe that our final proposal was compelling and represented full value for AstraZeneca based on the information that was available to us," Ian C. Read, Pfizer's chairman and chief, said in a statement. "As we said from the start, the pursuit of this transaction was a potential enhancement to our existing strategy."

The advances by Pfizer, which is based in New York and makes best-selling drugs like Lipitor and Viagra, pitted two of the world's largest drug makers against each other. Powerful political forces on both sides of the Atlantic weighed in on corporate taxes, cancer research and the potential effect on jobs in Britain, where an economic recovery is underway but employment remains shaky.

Pfizer made several offers, all of which AstraZeneca's board rebuffed. The directors said the latest offer, on May 18, "undervalues the company and its attractive prospects."

Leif Johansson, chairman of AstraZeneca, said on Monday, "We welcome the opportunity to continue building on the momentum we have already demonstrated as an independent company."

He said, "In the coming months, we anticipate positive news flow across our core therapeutic areas, which underpins our confidence in the long-term prospects of the business."

Pfizer's final offer valued the company at nearly 70 billion pounds, when AstraZeneca's market capitalization was roughly £55 billion. AstraZeneca, second to GlaxoSmithKline among British drug makers, demanded an offer of more than £74 billion.

That Pfizer was unable to use its vast clout to win its smaller rival, whose performance had been underwhelming, is a coup for AstraZeneca. The British company staged a spirited defense, arguing that its drug development pipeline, dry not long ago, was full of promising new drugs, among them MEDI4736, a lung cancer drug that some analysts say could be worth as much as $6 billion in peak annual sales.

AstraZeneca played up Pfizer's interest, if the merger were to go through, in relocating to Britain for tax purposes, a tactic known as an inversion. Such a move would allow Pfizer to escape a higher American corporate tax rate and free its overseas earnings from any claims by United States tax collectors.

British politicians argued that Pfizer should guarantee jobs, even though AstraZeneca has eliminated plenty of them.

By the end of the bidding process, AstraZeneca shareholders were split on its decision to reject the deal. Its largest shareholder, BlackRock, supported the decision, but wanted AstraZeneca to renew talks with Pfizer about a potential deal later, according to a person familiar with the talks.

Last week, the AXA Group's British investment arm, which owns less than 1 percent of AstraZeneca, said the company's board should allow shareholders to vote on Pfizer's offer.

Schafer Cullen Capital Management, a New York investment manager; the British asset manager Schroders; and Jupiter Fund Management also have encouraged AstraZeneca to restart negotiations. Other shareholders have voiced support for AstraZeneca's board, including Fidelity Worldwide Investment, Threadneedle Asset Management, Investor AB of Sweden, and the influential fund manager Neil Woodford of Woodford Investment Management.

AstraZeneca is now under pressure to achieve ambitious performance targets that it released to defend itself.

Chad Bray contributed reporting.

A version of this article appears in print on 05/27/2014, on page B1 of the NewYork edition with the headline: Pfizer Abandons Bid for AstraZeneca.

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DealBook: A Hedge Fund Highflier Comes Back to Earth

ENGLISH BICKNOR, England — The chickens of the one percent could roost comfortably here.

In this West England village, where sheep seem more abundant than people, a hedge fund manager, Crispin Odey, is close to completing a chicken coop in the style and scale of a small Grecian temple. Screened by walls and vegetation, it has been an object of mystery, though elaborate architectural drawings reveal a sweeping three-sided stairway, two dozen columns and radiating rooftop design flourishes.

If nothing else, the sprawling coop, with a final cost above $250,000, has made Mr. Odey headline fodder. British tabloids called it Cluckingham Palace.

That he built it on the back of Europe's economic slump has only added to the vitriol for what some feel is an ostentatious display at a time of economic suffering. Mr. Odey profited handsomely during Europe's financial crisis, including from betting that British banks would falter. The Guardian called his coop a "fowl extravagance."

Locals, though, don't seem to mind. Christopher Lathan, a member of the English Bicknor parish council, said, "I think most people feel that what anyone does on their own land is up to them so long as it affects no one else."

Ostentation is no stranger to Britain. Even by the standards of the superrich, London has seen a remarkable influx of wealth. Sheiks. Oligarchs. Financiers. Real estate prices soar ever higher and eye-popping inequalities have grown.

Financiers like Mr. Odey, 55, are semi-celebrities. He and his second wife, Nichola Pease, another investment industry stalwart, are sometimes called the Posh and Becks of the financial world, a nod to Britain's most celebrated nonroyal couple, the Beckhams.

Mr. Odey's investments are also carefully picked over. Recently he bet against Manchester United. He also demanded that one of his holdings, the German cable provider Sky Deutschland, get a better price from a bidder, BSkyB. That company is largely owned by 21st Century Fox, which is headed by his former father-in-law, Rupert Murdoch.

His profile grew as his flagship $2.3 billion Odey European fund gained 200 percent from the beginning of 2007 through last year, making it one of the best performers among London-based hedge funds despite faltering in 2011. By comparison, the Standard & Poor's 500-stock index returned 30 percent in that period.

This year, his largely charmed run through the crisis came back to earth. In March, his fund fell nearly 8 percent, leaving it down 4.6 percent for the first quarter in what has been a volatile time for hedge fund managers. "The reversal in fortunes has been swift and the destruction intense," Mr. Odey wrote in a letter to investors in March, adding, "We are down to hand-to-hand fighting."

His fund has been weighed down by holdings like Sky Deutschland and D. R. Horton, the American home builder.

Anthony Lawler, an executive at GAM, a firm that oversees portfolios of hedge funds for institutional clients, said a number of such funds were hurt by "price reversals in many of the widely held equity long positions from last year," adding that selling by money managers "fed on itself and led to some painful losses."

Mr. Odey, gregarious and whimsical in an English gentleman sort of way, concedes as much. "All of us were in what you would call the momentum stocks," he said in an interview.

Today, he sees the market at a crossroads: "The world economy could turn in many different ways." Quantitative easing — the purchase of bonds and other financial instruments by central banks to stimulate economies — has been only modestly effective and credit growth has been surprisingly weak, while the business model of banks has become ever more difficult.

He expects more of an American recovery this year, more stagnation in Europe and a reckoning in China, which will be painful for emerging markets.

"China will crumble," he wrote in his letter.

He is also critical of the status quo in Europe. He once backed the Conservative Party, but now speaks warmly of Nigel Farage, the leader of an increasingly popular party that wants Britain to leave the European Union. "I would rather we were out of Europe," Mr. Odey said. "It's probably a protest vote at this point."

He plays well the patricianly British financial baron. He was educated at Oxford. He wears suspenders. He is engaging and candid, a flurry of activity during an interview. His left hand would reach over his head to scratch his right temple, his right hand would massage his neck, leaving his hair in various states of array and disarray, then both arms would wave for emphasis.

Ups and downs are nothing new. He was born into old money — his father and grandfather ran a leather goods and chemicals company, Barrow Hepburn & Gale. But his father lost his job and ran up debts, forcing Mr. Odey to sell the family estate.

He recalled a lawyer telling him at the time: "You are only 23 years old. Your trustees might have behaved badly, but they were great friends of your father, and they did it for him, not you. It all went wrong and so you start getting annoyed. Go out there and make the money. It's a much better way of doing it."

"I remember coming out and thinking, he's right," he said, adding, "The fact that I wasn't as rich as I thought I was going to be gave me a lot of drive."

He made his mark as a rising star in the investment industry, including a stint at Barings Bank. He did well enough to earn the backing of George Soros when he went out on his own in the early 1990s and set up a classic hedge fund, buying stocks and betting against others by selling short.

Mr. Odey's firm nearly went belly up in 1994, after taking a big position in government bonds only to have the Federal Reserve unexpectedly raise interest rates.

"The first bear market, you never had one, so it takes your trousers off," he said. "The second one, basically, because the first one was so painful, you handle it with kid gloves." The third time, he added: "You get onto the front foot. Just because everybody else is losing money, why should that influence me? This should be an opportunity to make money."

Now he is preparing for the market's next phase.

"What killed most people in '08 was that they couldn't believe that a Lehman could go, or a Bear Stearns could go, or that anything could change, nor in today's world can they ever believe that China can be anything other than totemic and strong," he said.

As he sees it, China's reliance on an export-driven business model and large current account surpluses to underwrite development can't continue much longer.

"What happened in 2008 was they got to a size, when the world stopped growing, they stopped growing, so their export markets basically seized up, and they should have seized up on the infrastructure," he said. "But in fact, what they did was redoubled, and redoubled again, the infrastructure spending."

He is now only 20 percent net long, reflecting his cautious position. "Despite the fact the world is recovering, you should be a little bit more scared than you've been and keep a little bit more cash," he said.

Never one to sit still, he is also repositioning his poultry palace, which he said had "morphed into a library." So what is the deal with the coop anyway?

"For me it's more of a folly than a chicken house," he said, referring to the ornamental buildings that adorn some of the grand English estates of past centuries.

He gamely showed photos of the nearly completed structure on his iPhone. "Once I started thinking about what I wanted to have there, it was a Schinkelian temple." Karl Friedrich Schinkel, he explained, was the architect who worked for the Prussian royal family, "and built almost all of that stuff you come across in Brandenburg and in Berlin."

Mr. Odey pointed to a relief visible along one wall. "I have the chickens and egg having the age-old fight of who came first," he smiled. "It's carved in stone," and there will be a Latin inscription, "Quis primus venit?"

Meaning?

"Meaning, 'Who came first?' "

A version of this article appears in print on 05/23/2014, on page B1 of the NewYork edition with the headline: A Highflier Comes Back to Earth.

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DealBook: After Fed, Bernanke Offers His Wisdom, for a Big Fee

On Tuesday, Ben S. Bernanke spoke in Abu Dhabi; on Wednesday, he was in Johannesburg. By Friday, he was in Houston. That week in March was a particularly busy one for Mr. Bernanke, the former chairman of the Federal Reserve.

During his eight years as steward of the world's largest economy, Mr. Bernanke's salary was about $200,000 a year. Now he makes that in just a few hours speaking to bankers, hedge fund billionaires and leaders of industry. This year alone, he is poised to make millions of dollars from speaking engagements.

Mr. Bernanke is following a well-trodden path that his predecessor, Alan S. Greenspan, and other Washington policy makers have taken. On the speaking circuit, he is putting just one foot through the revolving door between Washington and Wall Street, being paid by financial firms but not employed by one.

Investors are dealing with an economy that is in large part the creature of Fed policies under Mr. Bernanke, and they are willing to pay top dollar for his words of wisdom as a result.

Mr. Bernanke has agreed to speak with a Middle Eastern bank, private equity firms and trade associations, as well as at investment bank get-togethers, charging his hosts fees that range from $200,000 in the United States and $400,000 for engagements in Asia. While he has dined with hedge fund managers at small events arranged by investment and brokerage firms including JPMorgan Chase, some Wall Street firms have balked at the high fees.

"Chairman Bernanke decided after he left office, like most good civil servants, that he wanted to make a little bit of money and did the dinner circuit," Michael E. Novogratz, a principal of Fortress Investment Group, told an audience of wealth managers at a conference in Las Vegas last week.

At his first of several dinners after retiring from the Fed in March, Mr. Bernanke spoke to a group of hedge fund managers, including Mr. Novogratz, at Le Bernardin in Midtown Manhattan. The setting was so intimate that the group took up just one of the four-star restaurant's three private dining rooms.

"At those dinners he gave credence to the idea that the Fed believed in lower potential G.D.P. and lower potential inflation," Mr. Novogratz said.

"I think that got through to the market and that was kind of the accelerator of this giant trade in fixed income that has happened," he added, referring to an unexpected rally in government bonds. The market has rallied this year as investors, concerned that the economy will not grow as fast as expected, have sought safer assets like Treasury securities.

"I think that the markets and investors will put more credence on what Bernanke says," said David Rosenberg, chief economist and strategist at Gluskin Sheff. Referring to Mr. Bernanke's successor, Janet L. Yellen, Mr. Rosenberg added, "There is a pervasive belief that Bernanke and Yellen are joined at the hip."

David A. Tepper, founder of the $20 billion hedge fund Appaloosa Management, who was also at the Le Bernardin dinner, expressed regret that he did not trade on Mr. Bernanke's guidance at the dinner.

"He gave this stuff out, but I didn't realize what he was saying at the time, so I didn't do a great trade," Mr. Tepper said at the conference in Las Vegas last week.

For many investors, the big question is when and how quickly interest rates will rise. Some Wall Street firms like BTIG, the institutional brokerage firm that organized the Le Bernardin dinner, offer their top clients private dinners with important former officials like Mr. Bernanke to try to differentiate their offerings from those of their rivals.

But others are consciously passing up the opportunity to hire Mr. Bernanke. UBS and Goldman Sachs considered his fees too high, according to two people briefed on the discussions between Mr. Bernanke's representative and the banks but not authorized to speak about either publicly.

It is not unusual for senior government officials to join the speaking circuit or take lucrative jobs in the private sector after leaving public office.

Mr. Greenspan was hired to consult for the hedge fund Paulson & Company, Deutsche Bank, and the bond investment firm Pacific Investment Management Company after stepping down as Fed chairman. After leaving the top job at Treasury, Timothy F. Geithner joined the private equity firm Warburg Pincus.

And Mr. Bernanke is free to speak about his views on the economy as long as he does not breach any confidentiality agreement.

"If they are saying something that they were saying as a public official, is there something wrong with that?" Mr. Greenspan said.

Since his busy week jetting around the world in March, Mr. Bernanke has made several other appearances, including at a private equity conference hosted by the Blackstone Group a few weeks ago. He is scheduled to speak in Pennsylvania at the Lancaster Chamber of Commerce's annual event on May 28, where members will pay $225 for a ticket.

Then things will pick up again for the former Fed chairman in the fall, when he is scheduled to speak at the SALT hedge fund conference in Singapore. Morgan Stanley is in discussions with Mr. Bernanke to have him also speak at a dinner on the sidelines of the conference.

In November, over the span of two weeks, he is to give keynote speeches at a series of events in the United States, hosted by the Association for Financial Professionals; the Schwab Impact conference; and the Commercial Finance Association.

Though Mr. Bernanke has been busy traveling these days, he spends most of his time as an economic studies fellow at the Brookings Institution and is working on a book about his time at the Fed.

He also delivers pro bono speeches and does not always pocket all the fees, a spokeswoman for Mr. Bernanke at the Brookings Institution said. "In addition, he is donating hundreds of thousands to charity," she added.

The Washington Speakers Bureau, which coordinates Mr. Bernanke's speaking engagements, did not return calls.

Not everyone agrees with the fees that Mr. Bernanke charges.

"You can spend $250,000 for Bernanke's time at a private dinner, or you could just sit down and read what people like Janet Yellen and Mark Carney have to say," Mr. Rosenberg said, referring to the governor of the Bank of England. "You can actually do that for free and pretty much draw the same conclusions."

A version of this article appears in print on 05/21/2014, on page B1 of the NewYork edition with the headline: After Fed, Bernanke Offers His Wisdom for a Big Fee.

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The Lede: Young Iranians Arrested for Being Too ‘Happy in Tehran’

A copy of the video "Happy in Tehran," originally posted on YouTube in April.

Last Updated, 11:00 p.m. | Just days after Iran's president denounced Internet censorship as "cowardly," six young Iranians were arrested and forced to repent on state television Tuesday for the grievous offense of proclaiming themselves to be "Happy in Tehran," in a homemade music video they posted on YouTube last month.

By uploading their video, recorded on an iPhone and promoted on Facebook and Instagram, the group was taking part in a global online phenomenon, which has resulted, so far, in hundreds of cover versions of the Pharrell Williams song "Happy" recorded in more than 140 countries.

"Happy in Tehran" was viewed more than 165,000 times on YouTube before it attracted the attention of the police and was made private.

In a speech over the weekend, President Hassan Rouhani argued that Iran should embrace the Internet rather than view it as a threat, Reuters reported. His remarks were also summarized on a Twitter account updated by his aides.

#Cyberspace should be seen as opportunity: facilitating two-way communication, increasing efficiency & creating jobs. http://t.co/iYkzgHpXkQ

— Hassan Rouhani (@HassanRouhani) 17 May 14

"We must recognize our citizens' right to connect to the World Wide Web," the president said, according the official IRNA news agency. "Why are we so shaky? Why have we cowered in a corner, grabbing onto a shield and a wooden sword, lest we take a bullet in this culture war?" he asked.

"Even if there is an onslaught, which there is," he added, "the way to face it is via modern means, not passive and cowardly methods."

The arrest of the young dancers, and their televised public humiliation, angered Iranians at home and abroad, and seemed to support President Rouhani's case that such crackdowns served only to make the Islamic Republic of Iran look weak in the culture war being waged online.

If you dance to @Pharrell's #Happy in Tehran, you will get arrested by regime forces! https://t.co/aROUbttWJG #Iran http://t.co/e7Cqo3F9py

— Sheema Kalbasi (@IranianWoman) 20 May 14

#Iran a country where being "happy" is a crime.

— Golnaz Esfandiari (@GEsfandiari) 20 May 14

#Iran youth arrested for making a fan video for @Pharrell's song HAPPY.
#FreeHappyIranians
Via @MantisRecords http://t.co/6AqyU2Gwer

— Negar Mortazavi نگار (@NegarMortazavi) 20 May 14

The Iranian people cannot be forced to live in a world where enrichment is a right, but happiness is not. #freehappyiranians @rezaaslan @ase

— Trita Parsi (@tparsi) 21 May 14

During their appearance on state television, the six said that they had no idea the footage would be broadcast. The report also included a warning from Tehran's police chief to the youth of Iran not to be seduced by the filmmakers behind viral videos. The officer, who referred to the exuberant video as "a vulgar clip which hurt public chastity," also claimed that it had taken the authorities only a matter of hours to identify and arrest the participants, even though the video was uploaded a month ago.

Video from Iranian state television, showing six young people being interrogated about the music video they danced in.

The arrest of the young people came after the dancers had shared links to reports on their video in Western publications including The Huffington Post and Le Monde.

In an interview with the news site IranWire last month, one of the dancers said that the women in the video had "covered our hair with wigs" in an attempt to conform to Islamic dress codes. She also said that the aim of the participants was in part promotional, "to tell the world that Iran is a better place than what they think it is."

"Despite all the pressures and limitations," she added, "young people are joyful and want to make the situation better. They know how to have fun, like the rest of the world."

My colleague in Tehran, Thomas Erdbrink, observed that, according to Iran's constitution, the judiciary is a separate power, "often at odds with government polices." These arrests, he noted, "again illustrate that."

Late Tuesday, as news from Tehran reached the man whose song had inspired the video, Mr. Williams shared a link to the report on Twitter and expressed his sadness.

It's beyond sad these kids were arrested for trying to spread happiness http://t.co/XV1VAAJeYI

— Pharrell Williams (@Pharrell) 21 May 14

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A version of this article appears in print on 05/21/2014, on page A10 of the NewYork edition with the headline: 6 Iranian Youths Arrested for Viral Video Despite Call to Embrace Web.

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DealBook: Credit Suisse Pleads Guilty in Felony Case

Evan Vucci/Associated Press

Updated, 10:12 p.m.

Credit Suisse has done what no other bank of its size and significance has done in over two decades: plead guilty to criminal wrongdoing.

In a sign that banking giants are no longer immune from criminal charges, despite concerns that financial institutions have grown so large and interconnected that they are too big to jail, federal prosecutors demanded that Credit Suisse's parent company plead guilty to helping thousands of American account holders hide their wealth.

As part of a deal announced on Monday, the Swiss bank met the demands, agreeing to one count of conspiring to aid tax evasion in a scheme that "spanned decades." Credit Suisse, which has a giant investment bank in New York and whose chief executive is an American, will also pay about $2.6 billion in penalties and hire an independent monitor for up to two years.

The rebuke from federal prosecutors as well as from the Federal Reserve and New York's state banking regulator, Benjamin M. Lawsky, is intended as a blow against overseas tax dodging and the shadowy world of Swiss bank secrecy. The deal also signals a shift in prosecutors' tactics. It is the most prominent bank to plead guilty in the United States since Drexel Burnham Lambert in 1989, and the largest to do so since the Bankers Trust in 1999, a bank a fraction the size of Credit Suisse.

For Credit Suisse, other than the fines and the reputational stain of being a felon, the implications are likely to be limited. The bank may lose some clients but is otherwise expected to survive largely unscathed. The plea deal also enables it to move beyond a case that had prompted a congressional hearing and had thrust the bank into an international squabble over tax dodging. If the bank had continued to fight the case, it would have been indicted, calling into question its very existence.

The Justice Department sought to contain the damage. Recognizing that criminal charges could prompt regulators to revoke a bank's license to operate, the corporate equivalent of the death penalty, prosecutors met with the Fed and Mr. Lawsky to discuss punishing Credit Suisse without putting it out of business and imperiling the economy, according to people briefed on the matter who were not authorized to speak publicly. Authorities agreed to announce the plea after the markets closed in the United States, preventing the bank's stock from plummeting.

Last week, the Securities and Exchange Commission also voted to grant Credit Suisse a temporary exemption from a federal law that requires a bank to hand over its investment-adviser license in the event of a guilty plea, according to two of the people briefed on the matter. That decision effectively spares Credit Suisse from one of the harshest repercussions of pleading guilty.

The plea from Credit Suisse, some three years after federal prosecutors in Virginia indicted eight bank employees, is expected to provide a template for prosecuting other financial misdeeds. BNP Paribas, France's largest bank, is next in line to plead guilty in the coming weeks, the people briefed on the matter said. The bank, which is suspected of doing business with countries like Sudan that the United States has blacklisted, will also pay more than $5 billion in fines, the people briefed on the matter said.

The BNP and Credit Suisse cases may also lay the groundwork for criminal actions against American banks. While the new strategy applies to American banks like JPMorgan Chase and Citigroup, those inquiries are at an earlier stage and it is unclear whether they warrant charges.

Prosecutors were not always so aggressive. In the wake of the 2008 financial crisis, the Justice Department did not file any criminal cases against a Wall Street bank or top executives. And in 2012, the British bank HSBC escaped charges of money laundering, stoking a public outcry.

Against that backdrop, prosecutors homed in on the Credit Suisse case as a turning point in their pursuit of big banks. While Credit Suisse's lawyers proposed a more modest guilty plea from a subsidiary rather than the parent company, people briefed on the matter said, prosecutors rebuffed the overtures.

"This case shows that no financial institution, no matter its size or global reach, is above the law," the United States attorney general, Eric H. Holder Jr., said at a news conference on Monday.

The decision to seek a guilty plea stems in part from Credit Suisse's failure to fully cooperate with the federal government. The bank, prosecutors say, was slow to turn over documents, deleted important emails and conducted an internal investigation that "failed to interview a number of the culpable individuals."

The bank also kept three of the eight indicted employees on its payroll. Under the terms of the deal with Mr. Lawsky, Credit Suisse must fire the employees.

"We deeply regret the past misconduct that led to this settlement," Brady Dougan, the bank's chief executive, said in a statement. "We can now focus on the future and give our full attention to executing our strategy."

By coordinating their plans, prosecutors and regulators believe they have minimized the fallout from pleading guilty. The plea is expected to lead at most a handful of pension funds and other clients to cut ties to the bank.

"This coordination was imperative," Mr. Holder said.

Long before the Credit Suisse case came to a head, prosecutors in Washington drafted a document outlining a possible chain reaction of a guilty plea, the people briefed on the matter said. The prosecutors, required under federal guidelines to weigh collateral consequences of charging a corporation, explained that some regulators have legal authority to withdraw a bank's charter.

For Mr. Holder, blamed for enabling the idea that banks are "too big to jail," the new strategy offers an opportunity to rewrite his legacy. But the public and congressional lust for Wall Street accountability may linger all the same.

For one, the plea deal will not require the bank to turn over the names of its American account holders, a hot-button issue in Congress. Credit Suisse has argued that Swiss law prevented it from turning over the names.

What is more, the cases against Credit Suisse and BNP will not quell the lingering outrage over the financial crisis. While the Justice Department levied billions of dollars in penalties on JPMorgan Chase and other banks, those cases were civil rather than criminal.

"Credit Suisse is a really big case, but people want to see accountability for the global financial crisis, and this just won't do that," said Brandon L. Garrett, a professor at the University of Virginia School of Law and the author of a new book, "Too Big to Jail: How Prosecutors Compromise With Corporations."

The notion that a criminal conviction could jeopardize the financial system stems from the experience of Arthur Andersen, Enron's accounting firm. In the aftermath of a 2002 criminal conviction, Arthur Andersen went out of business.

After that collapse, prosecutors adopted a more tentative approach to punishing big companies, relying instead on so-called deferred-prosecution agreements that suspend charges against corporations in exchange for fines and other concessions.

Parent companies remained elusive. Prosecutors obtained guilty pleas from companies in pharmaceuticals and other industries. But guilty pleas from financial firms have been rare.

The Credit Suisse case traces to earlier investigations of Swiss banks, which for decades helped wealthy Americans conceal their assets.

In 2012, federal prosecutors indicted Wegelin, Switzerland's oldest private bank. Three years earlier, Switzerland's largest bank, UBS, struck a deferred-prosecution agreement and agreed to pay a $780 million.

With Credit Suisse, Switzerland's second largest bank after UBS, the authorities aimed higher.

The bank will pay $1.8 billion to the Justice Department. And $715 million will go to Mr. Lawsky, who forced the bank to hire an independent monitor to oversee operations in Switzerland and the United States. The bank will also pay $100 million to the Fed.

The federal money will flow to the Treasury, while the payment to Mr. Lawsky will enter New York state's coffers. Mr. Lawsky also required Credit Suisse to keep a record of all its American transactions in the United States, a measure against Swiss secrecy.

The bank's conduct came to light during an investigation by Senator Carl Levin, the Michigan Democrat who runs the Senate's Permanent Subcommittee on Investigations. That investigation, which relied on 100,000 internal documents, culminated in February with a scathing report showing how the bank helped Americans hide their wealth through Swiss bank accounts.

As part of the plea deal on Monday, the Justice Department and the bank agreed to a statement of facts that further detailed the wrongdoing at Credit Suisse.

Hundreds of Credit Suisse employees were involved in the scheme. They often created "secret offshore accounts" that were held in the names of "sham entities and foundations." One Credit Suisse subsidiary began the practice more than a century ago. To cover up the crime, bankers were keen on "destroying account records."

Elizabeth Olson contributed reporting.

A version of this article appears in print on 05/20/2014, on page A1 of the NewYork edition with the headline: Big Swiss Bank Pleads Guilty In Felony Case.

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DealBook: AT&T to Buy DirecTV for $48.5 Billion in Move to Expand Clout

Updated, 10:06 p.m. |

AT&T agreed on Sunday to buy the satellite television operator DirecTV for $48.5 billion, trying to tilt the balance of power with media companies as the market for broadband Internet and video shifts.

With the acquisition, AT&T becomes the latest telecommunications giant seeking to establish an even greater reach.

Comcast agreed in February to buy Time Warner Cable for $45 billion, a bid to become the country's dominant provider of cable TV and high-speed Internet access. And Sprint, which is controlled by the Japanese telecom company SoftBank, has made no secret of its desire to merge with T-Mobile USA, creating a serious rival to Verizon and AT&T.

"The media chessboard is moving more this year than it has in the past decade," said Richard Greenfield, a media analyst with the brokerage firm BTIG. "You're seeing major shifts. Everyone is jockeying for position."

The newest round of consolidation may weigh heavily on the minds of government regulators, who have expressed growing concern that the nation's television and Internet services are increasingly controlled by just a few corporate behemoths.

For consumers, the acquisition may change little, at least at first, since AT&T and DirecTV share little overlap. AT&T said on Sunday that it planned to bundle its new acquisition's services with existing offerings like broadband Internet and cellphone service.

To some analysts, AT&T's latest acquisition seems questionable. The pay television business is considered a mature market whose subscriber growth has slowed sharply in recent years.

Still, the company has been trying to compensate for slowing growth in its own core businesses, including by moving into home security offerings and mobile data for cars.

Randall L. Stephenson, AT&T's chief executive, said in an interview on Sunday that he had discussed the possibility of buying DirecTV with his counterpart at the satellite TV provider, Mike White, for some time.

By acquiring the country's biggest satellite television operator, AT&T would gain more clout in negotiating with media companies as it increasingly focuses on video offerings. Through the deal, AT&T would become the country's second-biggest pay TV provider, behind only Comcast. AT&T has about 5.7 million TV customers through its U-verse service, while the satellite TV operator has about 20.3 million customers in the United States.

The acquisition would also bring to AT&T DirecTV's existing content at a time when AT&T has made video services a priority. DirecTV's offerings include the National Football League's "Sunday Ticket," and it owns minority stakes in the Game Show Network and MLB Network.

It would also help get AT&T into new markets like video and data services inside airplanes.

"If you think about what we're trying to accomplish, we're trying to get way down the road to get content across multiple devices," Mr. Stephenson said. "The more we peeled the onion back, frankly the better we felt about this."

DirecTV would also bolster AT&T's financial resources as it continues to invest in wireless-broadband capabilities, an effort that is expected to include bidding at least $9 billion for wireless network spectrum in a forthcoming government auction. The satellite TV company generated about $2.6 billion in free cash flow last year. Buying DirecTV would also expand AT&T's presence in Latin America, where the satellite company already has more than 18 million customers and expects to grow substantially as more households subscribe to pay TV services.

Under the agreement's terms, AT&T would pay $95 a share in stock and cash — roughly 10 percent higher than DirecTV's closing stock price on Friday and about 30 percent higher than where its shares were trading before word of a potential transaction began to emerge.

Including the assumption of DirecTV's debt, the deal is worth about $67.1 billion. Existing DirecTV shareholders would own 15 to 16 percent of the combined company after closing, which is expected in a year's time.

The deal is the biggest in years for AT&T, which has long looked to acquisitions for growth. It is the largest transaction the company has announced since its aborted $39 billion offer for T-Mobile three years ago, a takeover fiercely opposed by antitrust regulators because it would have cut down on the number of wireless phone service providers.

This time, some analysts believe the company will face less heat from the federal government. By their reckoning, regulators are likely to look favorably upon a deal that creates a bulwark against a strengthened Comcast.

"They want wireless to compete with wires," Mr. Greenfield, the media analyst, said. "The only way to complete that is to allow these deals to occur."

AT&T has also learned from the botched deal. It will not have to pay DirecTV a breakup fee if the deal does not go through. It had to pay T-Mobile $6 billion.

Mr. Stephenson, the AT&T chief, argued that the deal should be approved since it would not meaningfully reduce competition in the pay TV industry.

"We became very comfortable that this is a deal that should pass regulatory muster," he said. Referring to Comcast's bid for Time Warner Cable, he added, "Our deal is a very different deal."

At the same time, by moving forward with its DirecTV deal now, AT&T will probably complicate regulatory approvals for the cable television merger, according to several investment bankers.

But it is unclear whether investors and others will show enthusiasm for the DirecTV takeover, questioning the strategic fit.

"When I first heard the news, I was scratching my head," said Jim Nail, an analyst with Forrester Research. "Satellite is kind of a doomed technology. I don't see it being a long-term proposition."

AT&T intends to pay for the deal with cash on hand, debt and the sale of some assets. To help ease regulatory concerns in Latin America, the company plans to sell its roughly 8 percent stake in América Móvil, the telecommunications giant controlled by the billionaire Carlos Slim Helú.

The pace of consolidation, meanwhile, may prompt Sprint and SoftBank to proceed with a bid for T-Mobile, a deal that has already faced vocal opposition from several officials at the Federal Communications Commission. In that view, a merger would shrink an already consolidated industry to an unacceptable three major players.

But Sprint and SoftBank have argued that such a deal would create more competition in the fast-growing wireless space, creating a more formidable opponent to Verizon and AT&T.

AT&T's move also raises questions for the country's other major satellite television provider, Dish Network. That company's chief executive, Charles W. Ergen, has made noises about striking acquisitions to become a true broadband service provider, while also hinting that he may be willing to sell.

But AT&T was concerned that buying Dish would invite more regulatory scrutiny because of both its broadband ambitions and its existing trove of wireless spectrum, according to a person briefed on the matter.

Brian X. Chen contributed reporting.

A version of this article appears in print on 05/19/2014, on page A1 of the NewYork edition with the headline: AT&T to Acquire DirecTV in Move to Expand Clout.

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DealBook: In Last-Ditch Bid, Pfizer Offers $119 Billion for AstraZeneca

Pfizer has again raised its offer for AstraZeneca, making what it said was a final effort to bring the giant British drug maker to the negotiating table.

The latest offer, made Sunday evening, is worth about $119 billion. It comes after AstraZeneca's rejection of several private and public offers from Pfizer.

If AstraZeneca rebuffs Pfizer's offer again, the American company may abandon its pursuit of a merger. Pfizer has said it would not make a hostile offer for AstraZeneca, and would pursue only a friendly deal.

The new offer represents a 45 percent premium over AstraZeneca's share price before news of Pfizer's interest became public. Under British takeover laws, Pfizer has until May 26 to make a formal offer. Otherwise it must walk away.

The ball is now in AstraZeneca's court. A rejection of the offer — and the threat that Pfizer would abandon its effort — could cause the British company's stock price to tumble.

AstraZeneca did not respond to the latest offer on Sunday night.

The push for what would be the pharmaceutical industry's biggest deal in more than a decade has set off debates on both side of the Atlantic.

In the United States, where Pfizer has long been a stalwart of American innovation and success, the discussion has centered on the company's effort to use the deal as a means to reincorporate overseas.

By acquiring AstraZeneca, Pfizer would be able to conduct a so-called inversion, redomiciling in Britain, where it would pay a lower tax rate, potentially saving $1 billion or more a year.

Pfizer is the largest and best-known company to try such a move, and lawmakers in Washington have responded by preparing legislation that would curtail inversions. Senator Carl Levin, Democrat of Michigan, was expected to introduce his bill this week.

In Britain, AstraZeneca has figured strongly in the political debate, as lawmakers from all the major parties, facing a national election next year, express concerns about the potential loss of jobs in the event of a Pfizer takeover.

Indeed, even though AstraZeneca has not agreed to a deal, Pfizer's chief executive, Ian C. Read, has nonetheless appeared before parliamentary committees to defend his company's pursuit.

AstraZeneca employs about 6,700 people in Britain, a fraction of its total 51,500 employees worldwide. Nonetheless, British lawmakers are concerned because Pfizer closed a plant in Sandwich, England, in 2011, leading to the loss of 1,500 jobs. Pfizer has committed to keeping open an AstraZeneca research center being built in Cambridge, England.

"We stand by our unprecedented commitments to the U.K. government," Mr. Read said in a statement on Sunday.

Coming in about 15 percent above Pfizer's previous offer, the latest proposal would give AstraZeneca shareholders 1.747 shares of the combined company, and 24.76 pounds in cash for each of their shares. That would value each share of AstraZeneca at about £55, or about $92.50.

Still, Pfizer expressed skepticism that AstraZeneca was prepared to agree to a deal.

"We have tried repeatedly to engage in a constructive process with AstraZeneca to explore a combination of our two companies," Mr. Read said. "Following a conversation with AstraZeneca earlier today, we do not believe that the AstraZeneca board is currently prepared to recommend a deal at a reasonable price."

Pfizer said it approached AstraZeneca on Friday with a slightly lower offer than the one announced on Sunday. But AstraZeneca said that offer, worth about £53.50 a share, "substantially undervalued" the company, according to Pfizer's statement.

In response, Pfizer made what it said was its final offer on Sunday. Under the offer, Pfizer shareholders would own 74 percent of the combined company, with AstraZeneca shareholders owning 26 percent.

A sweetened offer had been expected. After being turned down for a second time publicly, Pfizer last week said it would consider making a higher offer, and encouraged AstraZeneca's board to engage in deal talks.

Pfizer began approaching AstraZeneca earlier in the year, but was told that the company was not interested in a deal. Last month, Pfizer went public with an offer for about $99 billion, mostly in stock. This month, it raised its bid to about $106 billion. AstraZeneca has turned down all offers, saying they undervalue the company.

Mr. Read has continued to press his case. In a recent series of videos outlining his argument for a merger, he said AstraZeneca investors would be wise to accept an offer.

It allows AstraZeneca shareholders to "get an immediate benefit from the cash that we would pay them, it allows them to participate in a very strong combined company with great cash flows and great portfolio, and it allows a very efficient allocation of capital by my company," he said.

Both Pfizer and AstraZeneca face challenges. Pfizer, the maker of drugs like Viagra and Lipitor, is facing declining revenue and profit as some of its most popular drugs lose patent protection.

AstraZeneca, while it has a promising pipeline of cancer drugs, is also facing struggles with patent expirations and slowing revenue.

Should Pfizer succeed in acquiring AstraZeneca, it would be the capstone to a recent flurry of mergers and acquisitions among drug makers.

"We remain ready to engage in a meaningful dialogue," Mr. Read said, "but time for constructive engagement is running out."

Chad Bray contributed reporting.

---

This post has been revised to reflect the following correction:

Correction: May 18, 2014

An earlier version of this article misstated the value of Pfizer's latest offer. It is $119 billion, not $116.5 billion.

A version of this article appears in print on 05/19/2014, on page B1 of the NewYork edition with the headline: In Last-Ditch Bid, Pfizer Offers $119 Billion for AstraZeneca.

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Bits Blog: After European Court Decision, Google Works on a Tool to Remove Links

LONDON – Google will announce by the end of the month a mechanism for consumers to request that links to information about them be removed from the company's search engine, a leading European regulator said on Thursday. It was one of the first signs that Google was working through how to operate after a court ruling said consumers could make such requests.

Ulrich Kühn, ​head of the technical department at Hamburg's data protection regulator, one of Germany's leading data protection agencies, said that the details of the mechanism still had to be finalized. But a basic online tool for people to ask Google to take down potentially harmful links would be in place in about two weeks, he said.

"They are trying to come up with something that users can use to lodge complaints about specific links," Mr. Kühn said. "It will be rolled out across Europe for all citizens."

Google would not comment on when the mechanism would be online or how the tool would work.

In a statement, the company said the ruling on Tuesday by the Court of Justice of the European Union would have implications for how the company handles requests for information to be taken down.

"This is logically complicated," Google said in a statement. "As soon as we have thought through exactly how this will work, which may take several weeks, we will let our users know."

The decision by Europe's top court to allow individuals to demand that Google take down links in certain instances has been seen as a landmark case in the Continent's push toward increased data privacy.

The court's ruling centered on the so-called right to be forgotten, which would allow people to ask Google to remove links to certain online information about themselves. Unlike the United States, Europe places almost equal emphasis on the right to privacy and the right of freedom of expression.

The judges ruled that search engine is a "controller" of individuals' data within the European Union, which means that the search engine must comply with the Continent's privacy rules. Previously, the company had been viewed as a mere "processor" of online data, which allowed it to circumvent local data protection laws.

European data protection authorities say that since the ruling on Tuesday, the number of complaints from people seeking ways to take down online links to their past activities has increased.

Mr. Kühn said his office had received almost 20 complaints from Germans since Tuesday. On average, two people had contacted the authority each week before the Google court decision.

"The ruling took us by surprise," said Mr. Kühn, who contacted Google on Wednesday to find out how it would adjust to the court's decision. "The court has cemented the right to be forgotten into European law."

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India Ink: Live-Blogging the Vote Count in India

Over five weeks and nine phases, 550 million votes were cast in the massive Indian parliamentary elections that will usher in a new government. On Friday, India Ink is following the vote count with regular updates.

2:00 A.M. A Video of B.J.P. Celebrations

A video by Amey Polekar for The New York Times from outside the B.J.P. headquarters in Delhi, where party workers and supporters celebrated with firecrackers and a band from Uttarakhand played the drums.

1:58 A.M. B.J.P. Coalition Leading in 315 Seats

Out of 520 seats counted, the B.J.P. and its pre-poll allies are leading in 315 seats as of 11:27 a.m., according to the Election Commission.

1:53 A.M. An Aam Aadmi Party Supporter in Delhi Keeps the Faith

At the Aam Aadmi Party headquarters in Delhi, where Arvind Kejriwal gave his famous resignation speech just three months ago, Inderjit Sachdeva, an auto-rickshaw driver came from the city of Narela, 40 kilometers away, and he doesn't plan on working today. "I just want to be here with the other A.A.P. faithful," he said. He spoke about his commitment to the Aam Aadmi Party, and his faith that it would win the next Delhi state assembly elections.

"The biggest thing is that we've driven out Congress," he said. "The B.J.P.'s marketing team won this election. From tomorrow Kejriwal should start his national campaign and be even louder. And definitely in the coming Delhi elections we'll get a pure majority. I have no doubt."

— Max Bearak

1:47 A.M. Congress Party Chief Minister in Assam Said To Resign

In Assam, the Press Trust of India reports that the state's chief minister, Tarun Gogoi, will resign, taking full responsibility for the Congress party's debacle in the state. As of 11:10 a.m., the Congress party is leading in only three out of 14 seats, a traditional stronghold state for the party. The B.J.P., which had won four seats in 2009, is now leading in seven.

1:37 A.M. Young Voters Are Coming Out for B.J.P.

Ellen Barry of The New York Times wrote that a wave of new voters are coming out for the B.J.P. in India, voters too young to be affected by previous blots on the party's reputation.

But Mr. Modi seemed to benefit from changes in the electorate. Nearly 100 million new voters were registered ahead of this vote, including a vast influx of young people, and turnout broke all previous records, hitting 66.4 percent.

Compared with their elders, these young voters were unmoved by the decade-old history of the Gujarat riots, which had prompted many Western governments, including the United States, to impose visa bans on Mr. Modi. They also proved far less emotionally bound to the Nehru-Gandhi dynasty, which has served as the backbone of the Congress party since India won its independence, surviving the wrenching assassinations of two of its members.

Shekhar Gupta, editor of The Indian Express, a daily newspaper, called them "post-ideological Indians."

"These people are born after Indira Gandhi's assassination," he said. "For a lot of them, the 2002 riots are not even a faint blur. What is imprinted on their memory is five years of nongovernance, and a massive loss of white-collar jobs. Once you have gotten used to 7 percent growth, to go down to 4.5 is a real recession."

1:31 A.M. Expert Weighs In on Numbers

On Monday, exit polls predicted anywhere from 249 to 340 seats for the B.J.P.-led alliance, but the tallies could be higher.

Karthik Shashidhar, resident quant specialist at the Takshashila Institution, credited the "Modi wave" in the cluster of states known as the Hindi heartland.

I think the exit and opinion polls were very conservative about the estimates of the Bharatiya Janata Party. It's therefore interesting to see that the B.J.P. is doing much better than what was predicted for them in the opinion and exit polls.

I think the Modi wave is very much present especially in the Hindi heartland states like Uttar Pradesh, Rajasthan and Madhya Pradesh. The Congress party, at this stage, is likely to dip below 100 seats.

— Vishnu Varma

1:21 A.M. B.J.P. Coalition Above 280

Though the Election Commission has the B.J.P. leading in 257 constituencies, with the party's major pre-poll partners it has a lead in more than 280 constituencies as of 10:45 a.m., which is above the majority mark.

1:16 A.M. B.J.P. Leads So Far in 250 Constituencies

The Election Commission is reporting that the B.J.P. leads in 250 seats out of a total 485 counted as of 10:39 a.m. If the party maintains this lead, it will be very close to the 272 seats needed for a majority. The Congress Party is leading in a mere 49 seats. The Congress Party has never dipped below 100 seats in India's independent history. Its lowest tally was 114 seats in 1999, when it lost the election to the B.J.P.

1:10 A.M. Empty Congress Party Headquarters in Mumbai

Contrast the celebrations at B.J.P. headquarters with the desolation at the Congress Party headquarters in Mumbai.

Congress office in Mumbai is deserted http://t.co/q7DVreLmkn

— Mansi Choksi (@mansi_choksi) 16 May 14

1:07 A.M. B.J.P. in Varanasi Jubilant as Modi Takes the Lead

In Varanasi, the Election Commission is reporting that Mr. Modi is leading Mr. Kejriwal by almost 20,000 votes as of 10:30 a.m. Party workers continue to celebrate at the Varanasi B.J.P. headquarters.

More people dancing to dholak outside BJP office in Varanasi. #IndiavotesNYT http://t.co/2RhrznV5qT

— Betwa Sharma (@betwasharma) 16 May 14

12:40 A.M. B.J.P. Leading in Delhi Count

The B.J.P. is leading in all the seven seats in the national capital. Harsh Vardhan is leading by 36,843 votes in Chandni Chowk according to the Election Commission totals as of 10:27 a.m. The Aam Aadmi Party is trailing second in all seven constituencies. If the Aam Aadmi Party wins no parliamentary constituencies in Delhi, it will be a stunning defeat for a party that defied all expectations in the state assembly elections in December and went on to lead the state government here. In a story in April, Vaibhav Vats wrote that the Aam Aadmi Party has lost its momentum.

But the Aam Aadmi Party may regret its failure to seize the opportunity to make a larger imprint in this election. A series of strategic errors cost the party momentum, and its national campaign was diminished by recklessness, an absence of clear strategy and overweening ambition.

In April, The New York Times profiled candidates in the Chandni Chowk constituency.

12:45 A.M. Surprise Guests at B.J.P. Headquarters

Also, there were some elephants; photo by Amey Polekar for The New York Times.

Look, who were attracted by the Ladoos at the BJP headquarters in New Delhi: http://t.co/vVyYcD5uEW

— Malavika Vyawahare (@MalavikaVy) 16 May 14

12:41 A.M. Puja at B.J.P. Headquarters in Delhi

From Amey Polekar for The New York Times, a puja outside B.J.P. headquarters.

A puja in progress outside the BJP headquarters in New Delhi: http://t.co/Z2BiSsstzG

— Malavika Vyawahare (@MalavikaVy) 16 May 14

12:34 A.M. Mamata Banerjee's Party with Big Lead in West Bengal

The Trinamool Congress party is leading in 19 out of 26 constituencies counted so far in the state of West Bengal, as of 10 a.m. according to the Election Commission. The Trinamool Congress party chief, Mamata Banerjee, has come under fire after thousands of investors lost money in a Ponzi scheme.

12:22 A.M. B.J.P. Supporters in Times Square, New York

Earlier this evening in New York, B.J.P. supporters lined up in Times Square.

Via WhatsApp : "Live Coverage of Indian Elections Results at Times Square, New York" http://t.co/Vh4END1lWr

— Hiren Kotwani (@HirenKotwani) 16 May 14

12:18 A.M. Strong Showing For the B.J.P. in Early Counting

As of 9:42 a.m. Indian time, the Election Commission is reporting tallies so far for more than half the seats (339) — the B.J.P. leads in 183 constituencies, and the Congress Party in just 39.

12:14 A.M. Indian Markets Jump Early, Hitting Record Highs

Both the benchmark stock indexes hit record highs in early trading on Friday. The Sensex surged 1,053.82 points, or 4.4 percent, to hit 24,959.42, and the 50-share Nifty benchmark ascended 313.75 points, or 4.4 percent, to reach 7,436.90 points, shortly after markets opened

India's stock markets have been experiencing a particularly bullish run in expectation of a decisive mandate. After exit polls forecast that the opposition Bharatiya Janata Party would secure more than 272 seats out of the 545-seat Lok Sabha, or lower house of Parliament, giving it a governing majority, the benchmark Indian stock indexes rose to then-record highs on Tuesday.

However, exit polls have been proven to be wrong in past elections, and analysts expect a high degree of volatility in the stock market as election results are announced in stages on Friday. On Thursday, India's central bank governor, Raghuram Rajan, said the Reserve Bank of India had created "prudential contingency plans" to deal with volatility in the markets and would "infuse liquidity if needed."

— Neha Thirani Bagri

12:11 A.M. B.J.P. in Varanasi Says Modi Win "A Given"

In the B.J.P. office in Varanasi, where the contest between the Congress Party, the B.J.P. and the Aam Aadmi Party has turned into a symbolic fight between party leaders in the ancient holy city, a B.J.P. spokesperson, Nalin S. Kohli, articulated the differences between the B.J.P., through the leadership of Mr. Modi, and the Congress Party.

"There is a lot of hope and expectations given what we have seen in terms of price rise, unemployment, economic decline, women's security — basically a lack of governance on the part of Congress and U.P.A.," he said, referring to the United Progressive Alliance, led by Congress. "People saw in Modi the hope of development and good governance. It is with a degree of humility that I say Modi will win conclusively from Varanasi and that's a given."

— Betwa Sharma

12:00 A.M. At the B.J.P. Office in Varanasi, Chants For Modi

From Betwa Sharma in the crucial constituency of Varanasi, where Arvind Kejriwal is hoping to defeat Narendra Modi in an upset. She reports that B.J.P. workers are jubilant and flashing victory signs, and the B.J.P. is leading in 20 constituencies out of the 33 counted so far in the state of Uttar Pradesh, as of 9:35 a.m.

"Modi Modi" workers start chanting and clapping at the BJP office in Varanasi. #IndiaVotesNYT http://t.co/EWUdqFzv8d

— Betwa Sharma (@betwasharma) 16 May 14

11:57 P.M. A History of Instability In Parliament

One thing to watch in the election results is whether a coalition will need to seek more parties in order to form a government. In India's democratic history, the lower house of Parliament, or Lok Sabha, has dissolved four times when a temperamental coalition partner withdrew.

Incidentally, this has never happened to the Indian National Congress party, which leads the current government and is widely expected to be trounced Friday.

Here's a chronological look at some of the tumultuous parliamentary elections in the recent past and what they mean for Friday's results:

1990: Chaos prevailed when a coalition of opposition parties formed the government and lost the support of the Bharatiya Janata Party after just a year. V.P. Singh was succeeded as prime minister by Chandra Shekhar, who was in power for only six months before he lost the support of Congress, and fresh elections were held.

1996: After the nationwide violence precipitated by the destruction in 1992 of an ancient mosque in Ayodhya in Uttar Pradesh, the Bharatiya Janata Party, led by Atal Bihari Vajpayee, had become a political pariah. With 161 seats, it was the single largest party, but it was not able to attract any major coalition partner. After 13 days of failed efforts, Mr. Vajpayee resigned as prime minister, making his term the shortest in India's history.

Congress supported a Third Front leader, H.D. Deve Gowda, who resigned after 11 months. After one more attempt by a third party to rule the country, fresh elections were held.

1998: Mr. Vajpayee's party once again won a majority, but again lost its coalition after 13 months. This time it was because Jayalalithaa Jayaram, the chief minister of Tamil Nadu, withdrew as a coalition partner by inviting Sonia Gandhi, the Congress party matriarch, to tea. The B.J.P. scrambled, but in the end lost the government by a single vote.

1999: Fresh elections were held. This time, the B.J.P. not only won but retained its majority, and Mr. Vajpayee completed his term in 2004.

What does all this have to do with the count on Friday? If Congress is indeed headed for a crushing defeat as exit polls and analysts widely predict, it is important to remember that non-Congress parties have historically had difficulty keeping the peace with temperamental coalition partners. If the B.J.P. is headed for a majority, the margins will be key. If the B.J.P. and its allies retain close to 272 seats on their own, a stable government is likely. But if it's much less, coalition partners will be crucial to a government's longevity.

— Hari Kumar

11:55 P.M. Modi Leads in Gujarat

In Mr. Modi's home state of Gujarat, the B.J.P. is leading in 20 out of the 22 constituencies counted according to the Election Commission. Mr. Modi is leading by 132,901 votes in the constituency of Vadodara as of 9:23 a.m., according to the Election Commission.

11:50 P.M. Congress Leader Says It Looks Bleak

Television anchors have started questioning party leaders about early trends. In the first comments from the Congress Party, senior leader Abhishek Manu Singhvi told NDTV that the party would not concede defeat till 11 a.m., by which time party leaders hoped things would be clearer. "I agree that it looks bleak," Mr. Singhvi said.

As of 9:18 a.m. Indian time, the Election Commission is reporting that the B.J.P. is leading in 112 seats and the Congress Party in just 35, out of a total of 220 seats.

11:43 P.M. Before The Markets Open, An Economist Advises Caution

The Indian stock markets will open soon. While the Indian markets have been soaring to record highs on the anticipation of a change in leadership, analysts warn that the optimism might be overestimating the impact of a new government on India's struggling economy.

Leif Lybecker Eskesen, chief economist for India and Southeast Asia at HSBC Global Research in Singapore, said in a phone interview:

It's important not to over-estimate how much impact the elections will have on the Indian economy in the short term. Essentially what has slowed down growth in India are structural factors and the lack of progress on the implementation of economic reforms. A new government, even one with a strong mandate, cannot instigate immediate change on either front.

It's going to take a while before you can line up structural reform and economic reform and get them through the political machinery, and implement them and they begin to have an effect on growth. The economy will not see much of a recovery in the current fiscal year. I think it's going to by the next fiscal year that we begin to see the impact of the changes made post election.

It's also important not to underestimate the impact of the elections from the medium-term perspective, say three years down the road, if a new government gets sufficient progress on structural and economic reforms over the next one to two years.

It is important for a new government to demonstrate that it has the political willingness to move forward with economic reforms. In the first couple of months of the new government it would be key for the new leadership to make progress on some key economic reforms that have been lingering for a while, such as implementing the goods and services tax, liberalizing foreign direct investment into the economy and taking the Land Acquisition Bill through.

— Neha Thirani Bagri

11:39 P.M. A General in Ghaziabad

The former army chief General V.K. Singh looking busy at his campaign office in Ghaziabad, Uttar Pradesh. His competition is Raj Babbar, a popular former Bollywood actor for the Congress Party, and Shazia Ilmi of the Aam Aadmi Party.

Tracking the results with my team at Ghaziabad.. http://t.co/pajkhQCRqM

— Vijay Kumar Singh (@Gen_VKSingh) 16 May 14

11:33 P.M. AAP With the Lead In Four Seats in Punjab

The Aam Aadmi Party is leading in four seats in Punjab according to the Election Commission.

11:26 P.M. Election Commission Results–B.J.P. Leading in 28 Seats

Votes from the electronic voting machines are being counted. The Election Commission of India is reporting that as of 8:55 a.m. Indian time, the B.J.P. is leading in 34 seats, the Congress Party in 11.

11:12 P.M. Modi leading in Varanasi

CNN-IBN reports in a tweet that Mr. Modi is leading in Varanasi and Sonia Gandhi, the matriarch of the Congress Party, in Rae Bareli, Uttar Pradesh.

11:06 P.M. Security at B.J.P. HQ

Journalists are already staking out B.J.P. headquarters, where security is tight and where party workers, anticipating a win, ordered 300 kilograms of sweets.

Massive security at BJP HQ at Ashoka Road #MintElections #Results2014 http://t.co/4FpsNIjCs4

— Tarun Shukla (@shukla_tarun) 16 May 14

10:58 P.M. Graphic Explainer

As we wait for the votes to be counted, here's a helpful graphic explainer that the Carnegie Endowment produced. One of the best parts is the graphic that explains the relationship between the voters, the lower and upper houses of Parliament and the president, a relationship that's confusing even to those born here.

10:57 P.M. Postal Ballot Counting

Counting for the postal ballots has started. NDTV reports that the Bharatiya Janata Party-led alliance is leading in 48 constituencies out of 89 constituencies counted so far. The Congress Party's alliance is leading in 22 constituencies.

10:48 P.M. Regional Calculus

There are 545 lawmakers in India's lower house of Parliament, 543 of which are elected by voters. Any party gaining 272 of those seats, by itself or with allies, wins a majority, though a single party hasn't accomplished that feat since 1989. In a piece from Chennai in April, Ellen Barry of The New York Times wrote about this delicate arithmetic, and Mr. Modi's need to engage local politicians like Jayalalithaa Jayaram, the chief minister of Tamil Nadu.

But his path to the prime minister's office will depend on a familiar group of secondary politicians: regional satraps whose leverage derives from their ability to form or break a coalition government. Unless the B.J.P. wins the 272 seats necessary to govern alone, Mr. Modi will probably need the support of at least one of the "three ladies," a formidable group of horse-traders that includes Ms. Jayaram; Mamata Banerjee, the leader of West Bengal; and Mayawati, a former leader of Uttar Pradesh.

10:23 P.M. Scenarios for the Next Government

As the Election Commission counts the votes for 543 parliamentary constituencies, India Ink readers would do well to remember that anything could happen.

Exit polls released Monday have predicted a solid victory for a Bharatiya Janata Party-led alliance, but exit polls have been spectacularly wrong before. Any party or coalition of parties must gain 272 seats in the Lok Sabha, or lower house of Parliament, to achieve a majority and form a government.

Here are the possible scenarios for the next government:

1) The B.J.P. and its current allies — three major parties and about two dozen smaller parties — may cross the majority mark on their own. In that case, the president of India will invite the leader of B.J.P.'s parliamentary party to form the government.

2) The B.J.P. and its allies may fall short of a majority but still emerge as the single largest coalition. Around the 240-seat mark, it would become necessary for the coalition to corral powerful regional players. In this case, the president would invite the leader of the coalition to form the government. The coalition would have to prove on the floor of the Lok Sabha that it has a majority by the president's deadline.

The B.J.P. would then meet with smaller parties and strong regional leaders to get their support, which would likely include some deal-making, especially regarding cabinet positions. Jayalalithaa Jayaram's party in Tamil Nadu and Mamata Banerjee's in West Bengal are considered two important but mercurial players in this scenario.

3) If the B.J.P. and its allies fall significantly short of a majority and fail to come up with enough additional partners on the floor of the Lok Sabha, the president would ask the Indian National Congress-led government to continue while he starts a dialogue with other big parties.

An alternative coalition could be formed by the Congress party or by a so-called Third Front, a group of parties that doesn't include the two main national players. Any coalition would be asked prove it has a majority on the floor of the Lok Sabha.

4) If the alternative coalition also fails to get a majority, the president will continue to try to resolve the deadlock with party leaders. If no consensus emerges, the Lok Sabha will be dissolved, and fresh elections will be called. But this is the most unlikely outcome, as the Lok Sabha has never been dissolved immediately after elections in India's independent history.

— Hari Kumar

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DealBook: At Odds, Omnicom and Publicis End Merger

The ad giants Omnicom Group and Publicis Groupe called off their $35 billion merger on Thursday, bringing a premature end to a deal that would have created the largest advertising company in the world.

A mix of clashing personalities, disagreements about how the companies would be integrated and complications over legal and tax issues derailed the deal nine months after it was announced.

The collapse is a huge setback for both companies. When the merger was announced last summer, it was billed as an opportunity to create an international powerhouse with the capabilities to serve large and small clients alike with a mix of digital and traditional agencies.

The deal was also seen as a response to the technological transformation of the industry, where the collection and sale of the personal information of millions of consumers is rapidly growing in importance. That business is competitive, with technology companies like Google and Facebook using their huge repositories of user data to place ads, in many cases bypassing the traditional agencies. Those agencies are under pressure to deliver more value for their customers.

But for Omnicom and Publicis, little progress had been made nearly a year after work on the deal began. The companies had not yet started to share client contracts with each other, and relations between teams that were intended to integrate remained frosty.

Omnicom, which is based in New York and led by John D. Wren, grew through acquisitions and came to dominate Madison Avenue with a family of agencies including BBDO, TBWA and DDB. Publicis, which is based in Paris and led by Maurice Lévy, owns Leo Burnett and Saatchi & Saatchi, among other agencies.

At the time the deal was announced, the companies agreed that both men would be co-chief executives to start and that after 30 months, Mr. Wren, who is 60, would become the sole chief executive while Mr. Lévy, 71, would become nonexecutive chairman. But both Mr. Wren and Mr. Lévy are strong-willed, and people close to the deal said that their personalities clashed.

One significant unresolved issue was which company would be acquiring the other one. After much persuasion, Publicis was prepared to allow Omnicom to be the acquirer, according to people briefed on the matter. But Publicis then balked at the notion that Omnicom's management would retain control of both the chief executive and chief financial officer roles. Omnicom was pressing to have its finance chief, Randall J. Weisenburger, keep his role.

That would have made the deal essentially an Omnicom acquisition of Publicis. In addition, Publicis executives contended that their company had the stronger financial model and was better positioned to integrate the merged corporation's finances.

Another holdup was the fact that China had not granted the deal regulatory approval. China's antitrust regulator, known as Mofcom, is often the last global regulator to approve big mergers and acquisitions. But people close to the process said that had Mofcom not given its blessing within the next several weeks, the companies would have had to restart the global regulatory process, delaying the deal further.

By February, Mr. Wren was signaling that the deal could be in jeopardy

"This transaction is highly complex and is taking longer than we originally expected," Mr. Wren said at the time while discussing his company's fourth-quarter earnings with analysts.

No termination fees will be paid as a result of the deal's collapse.

"It seems incredulous that this merger fell apart because of disagreements over roles and responsibilities," said Brian Wieser, an analyst at Pivotal Research Group. "These are things that shareholders should have expected to be sorted out before the merger was announced."

Mr. Wieser said that Publicis shareholders had been expecting it to do a big deal but that Omnicom investors were caught off guard when the merger was announced.

"Publicis going through this wasn't surprising," Mr. Wieser said. "But Omnicom shareholders were never prepared for this to happen in the first place."

But he predicted that industry consolidation would continue. "Publicis has been very clear. They want to get bigger," he said.

He said Publicis could make a hostile bid for Omnicom or go after another big player like the Interpublic Group. Dentsu, a large Japanese advertising firm, might also seek some kind of deal.

"We've essentially tossed the salad up in the air," Mr. Wieser said.

Both companies have spent nearly a year preparing for the merger, leaving teams at both companies distracted, according to people briefed on the matter. The impending deal also created an opening for their rivals. In recent months, WPP has poached several big accounts from Omnicom and Publicis. WPP is the No. 1 advertising group and, with the merger busted, will most likely stay that way.

If the merger had gone through, many of the world's biggest corporate clients would have been served by the same company. AT&T, Visa and Pepsi are Omnicom clients, while McDonald's, Coca-Cola and Walmart work with Publicis.

Mr. Lévy and Mr. Wren issued a joint statement announcing the end of the deal.

"The challenges that still remained to be overcome, in addition to the slow pace of progress, created a level of uncertainty detrimental to the interests of both groups and their employees, clients and shareholders," they said. "We have thus jointly decided to proceed along our independent paths. We, of course, remain competitors, but maintain a great respect for one another."

In a separate statement, Mr. Lévy said Publicis would continue with its own previously outlined growth plan.

"This merger was always one of opportunity, not necessity," he said. "The decision to discontinue the process was neither pleasant nor an easy one to make, but it was a necessary one."

The two companies find themselves back in the same competitive spot they were a year ago.

Technology is transforming the business by targeting ads to individual consumers, with online advertising growing at a faster rate than television. Companies like Google, Facebook and Twitter that collect information on their users can work directly with companies and cut out the traditional advertising agencies.

At the same time, new competitors in the digital advertising space have emerged over the last few years, including Accenture, Sapient and Deloitte, consultancies that have built up their marketing and data divisions to include many services once provided exclusively by ad agencies.

"We see the lines have been blurred between the various functions and the various players," Mr. Lévy said after the merger was announced last year. "In this world you have to partner and you have to compete with a lot of players."

Vindu Goel contributed reporting.

A version of this article appears in print on 05/09/2014, on page B1 of the NewYork edition with the headline: At Odds, Omnicom And Publicis End Merger.

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DealBook: Pfizer’s Plan to Go to London Spurs Other Companies to Consider Moving Abroad

Pfizer's attempt to escape the United States corporate tax rate by acquiring a British drug maker has set off a flurry of activity within other big companies across the country, at investment banks on Wall Street and in offices on Capitol Hill.

Pfizer has offered to buy AstraZeneca for $106 billion. If the deal is successful, Pfizer would become an English company, reducing its tax bill at least $1 billion a year.

The promise of such savings has many other big corporations seriously evaluating whether they, too, could reincorporate overseas. Walgreen is already under pressure from hedge fund investors that want it to move across the Atlantic.

In New York, investment bankers and lawyers are urging clients to act quickly if they are serious about such a move, knowing that rules could change soon. In Washington, lawmakers have started to examine what legislation could be drafted to stop the outflow of tax dollars.

Senator Carl Levin, Democrat of Michigan, on Thursday became the latest lawmaker to call for an end to so-called inversions, the deals through which United States companies acquire an overseas competitor and reincorporate abroad. He said he planned to introduce a bill to curb the practice. That could happen as early as next week, according to people briefed on the matter.

"It's become increasingly clear that a loophole in our tax laws allowing these inversions threatens to devastate federal tax receipts," he said in a statement. "We have to close that loophole."

Any new laws are unlikely to arrive before more big companies move abroad.

At a meeting in Paris last month, Walgreen investors, including the hedge funds Jana Partners, Corvex and Goldman Sachs Investment Partners, encouraged the company's management to consider an inversion, which would probably take place through an acquisition of Alliance Boots, a British drugstore chain in which Walgreen holds a 45 percent stake.

Walgreen's executives resisted the idea at first, concerned that the political cost would outweigh any tax savings.

But Pfizer's audacious proposal to acquire AstraZeneca opened the door for other companies to consider what was until recently viewed as a risky move. Now, Walgreen's management has begun to come around, people briefed on the matter said.

"We are aware of all the inversions that are happening and certainly all of that is being investigated," Rick J. Hans, Walgreen's divisional vice president for investor relations and finance, said on a call with analysts just days after Pfizer announced its plans. "We're not averse to looking at it," he said. "We've never been a proponent to pay more taxes than we have to."

Political pressure to address the tax maneuver has grown in recent years as dozens of companies have bought foreign rivals and moved their headquarters to countries with lower tax rates, reducing revenue to the Treasury.

But inversions were thrust into the spotlight last week, when Pfizer became the largest and best-known company to try to essentially renounce its American citizenship.

Mr. Levin said companies that moved overseas were unfairly taking advantage of many of the benefits of doing business in the United States but not paying their fair share of taxes.

Those benefits, he said, include "patent protection, research and development tax credits, national security and more." He added, "They shouldn't be allowed to shift their tax burden onto others."

Though laws have changed over the years to make inversions more difficult, they remain relatively easy to accomplish when done as part of an acquisition of a foreign company.

"It's unfair to criticize companies that do inversion when we live in this very complicated world," said a lawyer at a top law firm who has advised on inversions but spoke on the condition of anonymity because he was not authorized to comment publicly. "All companies should pay their fair share, but I'm not sure that companies that are inverted don't do so."

A number of pharmaceutical companies have set up in countries with low corporate tax rates, particularly Ireland and the Netherlands. Technology companies, industrial manufacturers and the banana producer Chiquita have also announced deals that would let them move abroad, substantially cutting their United States tax bills.

Warren E. Buffett, the chairman and chief executive of Berkshire Hathaway, said on Monday that his company was unlikely to ever move abroad, despite sometimes feeling at a disadvantage because of competitors' lower tax rates.

"We do not feel that we are unduly burdened by federal income taxes," Mr. Buffett said on CNBC. "But it does get a little annoying to us when we see other people paying far lower tax rates while engaging in the same sort of business that we engage in."

Yet in the wake of Pfizer's efforts, Mr. Buffett said he thought legislation would be coming soon.

"My guess is that when you get to companies of this size, this prominence, and with this speedup of momentum, my guess is that Congress one way or another addresses this," he said. "Whether they just try to work on this little aspect of the code that allows this, which is not insignificant, or whether that forces them to rethink sort of all corporate taxes, we'll find out. But I do think it's going to get attention."

In addition to Mr. Levin, other lawmakers have called for efforts to curb inversions in recent months. Senator Max Baucus, Democrat of Montana and a former chairman of the Senate Finance Committee, introduced legislation that would have limited inversions before he became ambassador to China. And the budget President Obama submitted to Congress included language intended to end them. Neither effort has gotten far.

Pfizer said on Thursday that it was open to changes in the corporate tax code but wanted to make sure United States companies remained competitive.

"We expect the comprehensive tax-reform debate to continue, and we are actively engaged in the debate," it said. "Pfizer supports comprehensive tax reform that enhances the global competitiveness of U.S.-based companies operating internationally."

A version of this article appears in print on 05/09/2014, on page B3 of the NewYork edition with the headline: Pfizer's Plan to Go to London Spurs Other Companies to Consider Moving Abroad.

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DealBook: Apple Said to Be in Talks to Buy Rising Music Brand for $3.2 Billion

Apple is in discussions to buy Beats Electronics, the company behind the popular Beats by Dr. Dre headphones, for $3.2 billion, according to people briefed on the talks, in what would be the biggest acquisition in Apple's history.

The deal would also include the new Beats Music streaming service, which was introduced in January as a competitor to Spotify and Pandora, and could signal an effort by Apple to transform its approach to music more than a decade after it opened the iTunes download store.

A deal has not been consummated, and the negotiations could still fall apart, according to these people, who declined to be identified speaking about it publicly. But if it is completed, the sale could be announced as early as next week, the people said. Apple and Beats declined to comment.

For Apple, whose revenue growth has slowed sharply in the last few years, the deal could point to a headlong move into the frontier of streaming music. The company, which only last year released its streaming product, iTunes Radio, has been slow to enter the streaming world.

A purchase of Beats would also give Apple a hot product and an even hotter brand, founded by the rapper Dr. Dre and the music executive Jimmy Iovine. After its enormous successes with the iPhone and iPad, Apple has been under intense pressure from investors to unveil new products, but none have yet been released.

At over $3 billion, the Beats acquisition would be a major departure for Apple, which under Steven P. Jobs, its co-founder, favored smaller deals. However, Timothy D. Cook, who took over as chief executive of the company shortly before Jobs died in 2011, has been vocal about the company's acquisitions and the strategy behind them. In its most recent earnings call, Mr. Cook said that Apple had acquired 24 companies in the last 18 months.

"We are expanding Apple's products and services into new categories, and we are not going to underinvest in this business," Mr. Cook said in the earnings call.

Beats began to sell its sleek, bass-heavy headphones in 2008 as an alternative to the lightweight earbuds that Apple included free with its iPod players. And even at prices of up to $450 apiece, they quickly became fashion statements. The company's headphones have fat profit margins. Headphone designers estimate the cost of making a fancy headset is as low as $14.

Annual sales of Beats products, which also include speakers and other audio items, have been estimated at more than $1.5 billion. Last year the private equity firm Carlyle Group invested $500 million in Beats, valuing the company at more than $1 billion.

Silicon Valley has lately been rife with multibillion-dollar acquisitions that have caused some investors to worry about excessive valuations and an inflating technology-industry bubble. In January, Google paid $3.2 billion for Nest Labs, which makes Internet-connected home devices, and in February, Facebook bought the messaging service WhatsApp for more than $16 billion.

For Apple, which has a $159 billion cash hoard, a $3 billion deal would have little effect on its purse.

Ben Bajarin, a consumer technology analyst for Creative Strategies, said that a purchase of Beats would not be a big departure from Apple's strategy of buying companies for their technology and talent to help develop future products. In other words, it is unlikely Apple would just ship Beats headphones with an Apple logo on them.

"This would have to fit into a much longer, more innovative strategy around perhaps the hardware and the service," Mr. Bajarin said.

Apple has recently struggled in developing new products. It has been working hard to develop a smartwatch, but problems like poor battery life have plagued that project, according to multiple people briefed on the company's plans, who spoke on condition of anonymity. And for years, rumors have abounded that the company has been working on a smarter, Internet-connected television set to become a stronger player in the living room. But that product has not been released either.

The Beats deal, which was earlier reported by The Financial Times, also suggests that Apple may want to shake up its approach to digital music. Through the iPod, which first went on sale in 2001, and the iTunes store, which opened in 2003, Apple transformed the music business, making downloads a viable, large-scale business that has sustained the music world as sales of CDs have plunged.

Apple is still the largest seller of downloads, and its store operates in more than 100 countries around the world. But its market share has been slowly eroded by Amazon and other sellers, and the download market itself is beginning to cool as consumers shift their listening behavior to online streaming. Last year some 28 million people around the world paid for a subscription music service, bringing in $1.1 billion, according to the International Federation of the Phonographic Industry, a trade group.

Beats Music arrived in January as a competitor to streaming services like Spotify, Pandora, Rhapsody, Deezer and Rdio, which have begun to spread rapidly around the world. Like the others, the Beats service makes millions of songs available for streaming over the Internet. It trumpets its expertise in creating playlists, highlighting the involvement of prominent music figures like Dr. Dre, Mr. Iovine and the Nine Inch Nails' leader, Trent Reznor.

Apple's iTunes Radio competes with some aspects of Spotify but is seen as a more direct rival to Pandora, which has become the dominant Internet radio service, with more than 75 million regular users every month.

Beats' music service and audio products division are organized as separate companies with overlapping management but different investors. Beats Electronics, the headphone company, is said to have accounted for most of Apple's proposed $3.2 billion purchase price.

A version of this article appears in print on 05/09/2014, on page B1 of the NewYork edition with the headline: Apple Said to Be in Talks to Buy Rising Music Brand.

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