HIV Soars - Greece’s Care Capacity INSUFFICIENT

HIV Soars Among Greece’s Drug Users Amid Austerity

By Simeon Bennett - Nov 30, 2012 4:30 AM GMT+0530

HIV infections among drug users in Greece jumped more than 20-fold in fewer than two years, fueled by a lack of needle exchange and methadone programs, according to the European Centre for Disease Prevention and Control.

The ECDC, the European Union’s agency that monitors infectious disease, reported 314 cases of the AIDS-causing virus among injecting drug users in the first eight months of this year. That compares with 208 for all of 2011 and no more than 15 cases a year from 2001 to 2010, the agency said.While the extent to which Greece’s economic crisis has contributed to the outbreak is unclear, austerity measures and high unemployment may fuel an acceleration in new infections in Athens and beyond the capital unless programs to provide methadone, clean needles and condoms are expanded, the Stockholm-based ECDC said in the report.“The current economic turmoil will continue to have adverse effects on HIV prevention not only in Greece, but also in other parts of Europe,” the ECDC said. “The cost of prevention to avert HIV infections will be less than the provision of treatment to those who become infected.”

Waiting lists for methadone programs in Athens were more than seven years long in August 2010, and about seven syringes were distributed per drug user per year, according to the report. Programs implemented by Greece’s health authorities since the outbreak began have reduced the waiting list to fewer than four years and increased the number of syringes to 45 per user per year, the ECDC said. Still, that’s well below the international standard of 200 needles, according to the report.

Care Capacity

“There are currently concerns that the HIV clinical care capacity in Athens has already reached a ceiling due to the increased number of HIV cases detected in 2012,” the ECDC said. “The response to the HIV outbreak by public authorities and NGOs is being managed in the context of social uncertainty, with exceedingly scarce financial resources.”Greece signed a three-year agreement with the International Monetary Fund, European Commission and European Central Bank in May 2010 that stipulated the nation cut health spending to no more than 6 percent of gross domestic product from 9.7 percent.

Euro-area finance ministers this week drew up a debt-relief agreement for Greece that reduced the rates on bailout loans and suspended interest payments for a decade. The government in Athens was also given more time to repay its debt and will be able to buy back its bonds.Even with those measures, Greece’s debt load, which will peak at almost twice the size of its economy in 2014, remains unsustainable, Moody’s Investors Service said yesterday. The chance of a default is “high,” Moody’s analysts wrote.

To contact the reporter on this story: Simeon Bennett in Geneva at sbennett9@bloomberg.net

To contact the editors responsible for this story: Phil Serafino at pserafino@bloomberg.net; Reg Gale at rgale5@bloomberg.net

A company with no asset of its own BUT PREMIUM 250 TIMES..!!!

Future Generali stake transactions don't add up Published: Sunday, Nov 25, 2012, 21:13 IST  By Rajiv Ranjan Singh | Place: Mumbai | Agency: DNA A company with no asset of its own issued shares to two different companies on the same day. While one company bought the shares at a face value of Rs10, the other paidRs2,500 apiece. And these weren't one-off deals. Thepractice has gone on for five years now – in Sprint Advisory Services PvtLtd.Sprint, incorporated in 2005-06 as a chain marketing company andrechristened as Sain Advisory Services in 2007-08, and further as Sprint Advisory Services in 2010-11, has no employees on record.What's more, it has posted losses year after year and gets only a paltry income through consultancy services, which has never exceeded Rs5 lakhper annum in the last five years.Still, it has been able to command a 250-time premium.What gives? Well, Sprint Advisory holds 49% stake in Future Generali Life Insurance Company, while Pantaloon Retail India and Maatschappij GraafsschapHolland NV hold 25.5% stake each.Between 2007-08 and 2010-11, Maatschappij, a little known firm based out of a tax heaven in Netherlands, invested Rs268 crore directly in FutureGenerali Life, while Pantaloon Retail invested a like amount, to take at 25.5% each.For the remaining 49% stake in Future Generali Life, Sprint Advisory invested Rs515 crore with an almost equal contribution coming fromMaatschappij and Pantaloon Retail. Maatschappij started investing in Sprint in 2007-08, against which Sprint Advisory issued shares at Rs2,500 a share for a face value of Rs10. As of 2010-11 fiscal end, Maatschappij had invested Rs283.66 crore in Sprint, but got just a 0.4% stake. However, Pantaloon Retail invested Rs283.54 crore in it and commanded a 99.96% stake.For 2010-11, Sprint registered a loss of Rs15.90 lakh, though its income from consultancy services stood at Rs1.2 lakh and other income atRs69,000.To be sure, between 2007-08 and 2011-12, Future Generali Life has attracted investments of Rs1,200 crore from these players, though DNAcould only collate the figures till March 2011 as Sprint is yet to file its annual return for the last fiscal. As these numbers show, despite investing 50% in the share capital of Future Generali Life, Maatschappij holds just 25.5% stake in the company, thanks to the hefty premium charged by Sprint Advisory, in which VijayBiyani, Future Group chairman Kishore Biyani's brother, is one of the four directors. The other three are Prakash Chandra Toshniwal, KrishnakantRathi and Roberto Gasso.For the record, Biyani and Gasso are also on the board of Future GeneraliLife, as Sprint representatives.Surely, all this can't be a coincidence; there has to be a game plan somewhere.Makes one ask – was theMaatschappij and Sprint Advisory transaction done to bypass the norm of a 26% limit for foreign companies in insurance?A detailed questionnaire sent to Sprint Advisory remained unanswered. Deepak Sood, CEO, Future Generali Life refused to give any answer.Curiously, there is little in the public domain about Maatschappij or its key executives.As per Bloomberg Businessweek, Maatschappij Graafsschap Holland NV was founded in 1975 and is based in Diemen, the Netherlands. ParticipatieMaatschappij Graafschap Holland NV operates as a subsidiary ofAssicurazioni Generali SpA.It is ironical that the absurd pricing scheme in Sprint was not questioned by the star-studded board of Future Generali Life. Former SEBI chairman GNBajpai, who is supposed to be an authority on pricing of shares, has headed the board for the last three financial years and Gorakhnath Agarwal, the head of the Acturial Society of India, is on its board and acts as the chief actuary and chief risk officer.It is also reliably learnt that Girish Kulkarni, one of the pilots of the absurd pricing scheme of Sprint Advisory, working as the chief marketing officer and a director of Future Generali in 2007-08 when Maatschappij started paying the premium for Sprint, now heads Star Union Dai-ichi, an insurance company promoted by a public sector bank. http://www.dnaindia.com/money/report_future-generali-stake-transactions-don-t-add-up_1769378-2

The biggest insider case..SAC Capital Advisors LP’s Steven Cohen..

SAC Insider Case Rides Finra Referral to Cohen’s Backyard

By David Glovin, David Voreacos, Bob Van Voris and Patricia Hurtado - Nov 23, 2012 10:50 PM GMT+0530

Steven Cohen, founder and chief executive officer of SAC Capital Advisors LP. Photographer: Ronda Churchill/BloombergThe biggest insider case ever, an alleged $276 million fraud that has led prosecutors and securities regulators to the inner-circle of SAC Capital Advisors LP’s Steven Cohen, stemmed in part from a referral from the Financial Industry Regulatory Authority.

The referral from Wall Street’s self-regulator came in 2008 from the New York Stock Exchange Division of Market Regulation, which later became part of Finra, according to three people familiar with the matter. Finra touted the resulting case, against ex-SAC portfolio manager Mathew Martoma, under its website headline, “Actions Resulting from Referrals to Federal and State Authorities.”

The question for the government now is: Where do they go from here? Court papers cite a “hedge fund owner” in conversation with Martoma before multimillion-dollar trades were made. But the government must show that a defendant in any insider trading case knew that the trades he was making were based on secret, material information. Regulatory action for a failure to supervise traders may be an easier path.“The government is applying extreme pressure on Martoma because they probably have decided he is the one person who can make the case against Cohen,” said John Coffee, a securities law professor at Columbia University. “As a practical matter, they’re going to need the testimony of Martoma.”

Internal E-Mails

Internal SAC e-mails could help the government build more cases in its investigation, several former prosecutors said. A senior trader who isn’t named in court documents said in an e- mail to Martoma as he began selling shares that “no one knows except you me and [the Hedge Fund Owner],” according to the complaint filed in Manhattan federal court. Cohen isn’t named in court papers or charged with a crime.

Martoma, an ex-portfolio manager for SAC’s CR Intrinsic Investors, was arrested Nov. 20 in what the U.S. said was the most lucrative insider scheme ever -- one that took place in the arena of health-care stocks. Martoma, who attended Harvard Law School and wrote medical-ethics articles under another name, traded on a neurologist’s tips about a clinical drug trial for an Alzheimer’s drug, prosecutors said. People familiar with the matter said Cohen is the unidentified hedge fund owner with whom Martoma spoke before making his allegedly illegal trades. Finra, which oversees 635,000 securities representatives, detects one-time offenders who may tip friends and family, as well as more sophisticated rings that work to conceal their trading and sources of inside information. Referrals from Finra are often pursued by investigators from the Securities and Exchange Commission and prosecutors from the Justice Department.

‘Sophisticated Investors’

“Insider trading investigations involving sophisticated investors such as CR Intrinsic can take a long time to develop,” said Cameron Funkhouser, head of Finra’s office of fraud detection and market intelligence. “No one ever confesses, so building a case requires in-depth analysis of hundreds of thousands of trading records and other data.”The regulator runs electronic surveillance on all shares traded on the New York Stock Exchange, on Nasdaq, on the American Stock Exchange and over the counter. Its investigators monitor numerous factors including the price and volume of shares, as well as historical trading patterns and news disseminated by publicly traded companies.The initial referral in the case against Martoma flagged what appeared to be suspicious short-sales of stock, said the people familiar with the matter, who declined to be identified because it isn’t public. Subsequent referrals built on the earlier one and explored other instances of questionable trading, they said.

Case Origins

Peter Donald, a spokesman for the Federal Bureau of Investigation, and Ellen Davis, a spokeswoman for U.S. Attorney Preet Bharara, whose office brought the charges, declined to comment on the origins of the case.The SEC sued Martoma and his firm, and while needing the same type of evidence of knowledge as prosecutors do, the agency has an easier standard of proof than in a criminal case.At a Nov. 20 press conference, SEC lawyer Sanjay Wadhwa said the case “was at least based in part from other investigations that focused on CR Intrinsic, but also based in part from a referral from Finra.”

‘Significant Dissent’

According to the government, Martoma, 38, urged Cohen to buy shares of Wyeth LLC and Elan Corp. (ELN) after getting encouraging news from Sidney Gilman, a University of Michigan doctor and researcher, about the prospects of their Alzheimer’s drug bapineuzumab, or bapi. Martoma and Cohen remained bullish on Wyeth and Elan despite “significant dissent” within CR Intrinsic and Stamford, Connecticut-based SAC “on the wisdom of a large unhedged investment” in those companies, according to the SEC complaint, filed Nov. 20 in Manhattan federal court.After learning from Gilman about bapi’s poor results in the clinical trial, Martoma had a 20-minute phone call with Cohen on July 20 in which he said he was no longer “comfortable” with the Elan investments, according to the government. Gilman, 80, has reached a non-prosecution agreement with the government and will testify against Martoma, prosecutors said. His account bolsters a case that’s based on e-mails between the two men, SAC business and trading records, and “sworn testimony of individuals associated with the hedge fund,” according to the criminal complaint.

‘Hard Work’

“Mathew Martoma was an exceptional portfolio manager who succeeded through hard work and the dogged pursuit of information in the public domain,” his lawyer, Charles Stillman, said Nov. 20 in an e-mailed statement, rejecting the charges. Martoma, who has also used the name A. Mathew Thomas, attended Duke University as an undergraduate and studied at Harvard Law School, according to Stillman. An A. Mathew Thomas is listed as the co-author of two medical-ethics papers, one of which identifies him as a member of Harvard Law’s class of 2000 and as the former deputy director of the National Human Genome Research Institute’s Office of Genome Ethics. Martoma was deposed by the SEC within the past year and asserted his constitutional right against self-incrimination, according to people familiar with the matter. The hedge fund manager faces as long as 20 years in prison if convicted. Stillman declined to comment on the Finra referral.

No Wiretaps

SEC Enforcement Director Robert Khuzami said at the Nov. 20 press conference that the government didn’t use wiretaps or other recording devices in the SAC case. Such methods were leveraged to great success in the prosecutions of Galleon Group LLC hedge fund co-founder Raj Rajaratnam, who is serving 11 years for insider trading, and former Goldman Sachs Group Inc. (GS) director Rajat Gupta, who was sentenced to a two-year term. Bharara declined to say whether prosecutors are targeting Cohen, whom he didn’t name.

“Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government’s inquiry,” Jonathan Gasthalter, an SAC spokesman, said Nov. 20 in an e-mailed statement. He declined to comment on Nov. 21 about the government’s investigation or the Finra referral.Should prosecutors seek to build a case against Cohen, they may cite the alleged 20-minute conversation between Martoma and the hedge fund owner, said Kit Addelman, a former regional director of the SEC now in private practice with the firm Haynes & Boone LLP. The two spoke after Gilman e-mailed Martoma a 24- page presentation detailing poor drug test results, following which SAC began selling Elan and Wyeth shares, according to the complaint.

Failure to Supervise

Aside from any prosecution, federal law permits the SEC to pursue a claim against SAC or Cohen if it finds they “failed reasonably to supervise” Martoma’s allegedly illegal trades.“I do think that’s a potentially viable claim,” said David Kotz, a former SEC inspector general who is now a director with the consulting firm Berkeley Research Group.To succeed on a failure-to-supervise claim, the regulator can show the hedge fund failed to set up proper controls to prevent illegal trading. Or it can show that executives failed to investigate red flags of illegality - “irregularities, something that doesn’t make sense, that Cohen or SAC were aware of that made it obvious that something was going on,” Kotz said.Red flags may include trading on information that could only have come from an improper source, Kotz said.

The SEC can pursue fines, bar officers and directors from the industry and claw back ill-gotten gains, said John Nester, an agency spokesman. He declined to comment on SAC or Martoma, or whether such a claim could be made in that case. Old allegations for which the statute of limitations has expired may still result in clawbacks and officer-and-director bars, he said.

SEC Sanctions

“The Commission’s ability to impose sanctions for failures to supervise is a powerful tool to compel a broker-dealer or investment adviser’s managers and executives to proactively monitor subordinate employees’ compliance with laws and regulations,” SEC Commissioner Daniel Gallagher said in a speech in February, according to a transcript. “Those high- level personnel clearly fall within the ambit of the Commission’s failure-to-supervise authority, a fact of which such high-level personnel are well aware.”In pursuing a criminal, civil or administrative action, internal SAC e-mails may also help the government bring a case against Cohen and his firm, lawyers said. One example is the message from the senior trader who told Martoma the hedge fund owner “knows.”

Elan, Wyeth

In addition, prosecutors may point to what Bharara said at the press conference was an almost $1 billion swing in SAC’s positions in Elan and Wyeth once Martoma got the alleged tip.Cohen and Martoma told the firm’s senior trader to sell Elan shares “in a way so as to not alert anyone else,” according to the complaint. SAC used so-called dark pools, which don’t identify brokers and institutions that buy and sell on their systems, and algorithms, which break up orders to disguise size, prosecutors said. An effort to conceal trading could be used by the government to argue circumstantially that there was knowledge the trades were improper.Any case against Cohen might also require that Martoma first reach a plea deal with the government and agree to testify, said Coffee of Columbia Law School.Still, if the government lacks wiretaps or other recordings of SAC employees, it may be difficult to bring charges against anyone above Martoma, saidKotz, the former SEC inspector general.

‘Great Pains’

“Quite frankly, if that e-mail and the phone call on Sunday were immaterial to the government, they wouldn’t bother putting it in the complaint,” said Bradley Simon, a former federal prosecutor now in private practice in New York. “They’re taking great pains in this complaint to place the hedge fund owner, Steve Cohen, at the epicenter of this activity with Martoma.”The criminal case is U.S. v. Martoma, 12-mj-02985; and the civil case is SEC v. CR Intrinsic Investors LLC, 12-08466, U.S. District Court, Southern District of New York (Manhattan).To contact the reporters on this story: David Glovin in New York at dglovin@bloomberg.net; David Voreacos in Newark, New Jersey at dvoreacos@bloomberg.net; Bob Van Voris in Manhattan federal court at rvanvoris@bloomberg.net; Patricia Hurtado in Manhattan federal court at pathurtado@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at +1-415-617-7137 ormhytha@bloomberg.net

Many advisers- HP WRITES DOWN $8.8 billion

In HP-Autonomy debacle, many advisers but little good advice

Reuters | Updated On: November 21, 2012 10:49 (IST)
New York: When Hewlett Packard acquired Autonomy last year for $11.1 billion, some 15 different financial, legal and accounting firms were involved in the transaction -- and none raised a flag about what HP said Tuesday was a major accounting fraud.

HP stunned Wall Street with the allegations about its British software unit and took an $8.8 billion writedown, the latest in a string of reversals for the storied company.
HP Chief Executive Meg Whitman, who was a director at the company at the time of the deal, said the board had relied on accounting firm Deloitte for vetting Autonomy's financials and that KPMG was subsequently hired to audit Deloitte.
HP had many other advisers as well: boutique investment bank Perella Weinberg Partners to serve as its lead adviser, along with Barclays. The company's legal advisers included Gibson, Dunn & Crutcher; Freshfields Bruckhaus Deringer; Drinker Biddle & Reath; and Skadden, Arps, Slate, Meagher & Flom, which advised the board.
On Autonomy's side of the table were Frank Quattrone's Qatalyst Partners, which specializes in tech deals, as well as UBS, Goldman Sachs, Citigroup, JPMorgan Chase and Bank of America. Slaughter & May and Morgan Lewis served as Autonomy's legal advisers on the deal.

While regulators in the United States and the United Kingdom, as well as the Federal Bureau of Investigation, are likely to spend many months if not years investigating what happened, legal experts said on Tuesday that it wasn't clear if any of the advisers would ultimately be held liable."The most logical deep pocket would be the acquired firm's auditors, who should have allegedly caught these defalcations," said James Cox, a professor at Duke University law school who specializes in corporate and securities law. Since both auditors missed the problems and it appeared to have taken HP a while to catch it after it took over Autonomy, the auditors may have a strong defense.
"You can have a perfectly sound audit and still have fraud exist," he said. A Deloitte UK spokesman said the company could not comment and would cooperate with any investigations.The law firms and the bankers will likely argue that they were not hired to review the bookkeeping and had relied on the opinion of the auditors, securities law experts said.Multiple sources with knowledge of the HP-Autonomy transaction added that the big-name banks on Autonomy's side were brought in days before the final agreement was struck. These sources said the banks were brought on as favors for their long relationships with the companies, in a little-scrutinized Wall Street practice of crediting -- and paying -- investment banks that actually have little do with the deal.

LAWSUITS, REPUTATIONS AT STAKE

Plaintiffs lawyers said they were taking calls from investors about HP on Tuesday. Darren Robbins, a San Diego-based plaintiff lawyer who represents shareholders, said the tech icon appears to have spent billions on a shoddy company without undertaking the proper due diligence, and thus misrepresented its finances to investors."I think they have serious troubles," he said.
But plaintiff lawyers may have difficulty bringing so-called derivative lawsuits against professional services firms, said Brian Quinn, an M&A professor at Boston College Law School. In those cases, plaintiff lawyers can sue third parties, such as auditors, on behalf of HP -- but they must convince a judge that HP's board is unfit to pursue those claims itself. In this situation, though, HP's board disclosed the alleged fraud itself, Quinn said.Even if the bankers and lawyers escape any legal problems, they could suffer a reputational hit. The scrutiny could be particularly unwelcome for Perella Weinberg: the firm advised Japanese camera maker Olympus' acquisition of British Gyrus -- a transaction that prompted investigations in the United States, United Kingdom and Japan into fees and payments made by Olympus.
Olympus had hired Perella to execute the transaction, which according to Thomson Reuters M&A database resulted in record bankers' fee of $687 million. Perella was not implicated in the matter.
Meanwhile, the most controversial banker involved in the HP-Autonomy deal, Frank Quattrone of Qatalyst, represented Autonomy and played a key role in getting HP to pay a high price.
A star investment banker in the 1990s, Quattrone had worked at Morgan Stanley, Deutsche Bank  and Credit Suisse, and helped arrange some of the biggest tech initial public offerings of the era, including Amazon.com  and Cisco Systems.
But his time at the top of Silicon Valley was curtailed by charges that he blocked an investigation into IPO kickbacks. After two trials failed to resolve his case, he ultimately reached a deal with prosecutors.
His return to the Silicon Valley M&A scene has impressed many in the tech world."His reputation is at an all-time high right now," said Dan Scheinman, the former head of mergers and acquisitions at Cisco who has worked with Quattrone on several deals.Analysts almost uniformly deemed the $11.1 billion he got HP to pay for Autonomy as overly rich -- a compliment to him at the time, but possibly a hollow success if HP's allegations prove true.
Copyright @ Thomson Reuters 2012http://profit.ndtv.com/news/international-business/article-in-hp-autonomy-debacle-many-advisers-but-little-good-advice-313568

FISCAL CLIFF - USA

REX NUTTING Archives | Email alerts

Nov. 21, 2012, 12:55 p.m. EST 10 people who led us to the ‘fiscal cliff’ Commentary: From Laffer to Obama, they fed our greed and guilt By Rex Nutting, MarketWatch

WASHINGTON (MarketWatch) — With our political leaders locked in a fiscal struggle that threatens to throw the economy off a so-called cliff and into recession, you might be wondering how we got to this place.

Remember that this supposed fiscal cliff is the direct result of two contradictory impulses in American life: Greed and guilt. Greed for low taxes, a strong military, a strong safety net and lots of government spending for everyone. And guilt that we weren’t paying our way. Read “Stop calling it a ‘fiscal cliff’”

All of us (or almost all) had a role in this melodrama, either benefiting from the spending or from the lower tax rates. Despite our culpability, it took strong national leaders to foster the heady mix of greed and guilt that brought us to this spot.

Here are the 10 people most responsible for bringing us to the edge of the fiscal cliff:

 

Arthur Laffer. Laffer was the economist who proved the existence of the free lunch. His Laffer Curve showed, in theory, that cutting tax rates would actually increase tax revenue. He gave intellectual cover to those conservatives who wanted to cut taxes, but who didn’t want to be seen as contributing to a big deficit. He gave them a guilt-free way to cut revenue.

There’s only one problem: Laffer’s ideas didn’t pan out in practice: Tax cuts don’t pay for themselves. Tax cuts are a major cause of our $16 trillion national debt.

Pete Peterson. If there’s one person who we can blame for making us feel guilty about the federal deficit, it’s Peterson, a hedge-fund billionaire who was a cabinet secretary in the Reagan administration. Peterson founded, funded or supported most of the institutions in Washington devoted to publicizing the problem of the deficit, including the Concord Coalition, the Peterson Foundation, The Fiscal Times, and the anti-deficit documentary “I.O.U.S.A.”

Without Peterson’s billions and the guilt it bought, the deficit would be a fringe issue.

Bill Clinton. President Clinton made budget surpluses look easy. The budget was in the black the last four years of his administration. What’s worse, he made surpluses look like a sure thing.

Clinton’s surpluses were partly the result of Washington going on a serious budget diet, with higher taxes paired with moderation in spending. But it was the booming economy — and higher taxes on capital income — that turned the modest deficits of the early Clinton years into surpluses.

By the time Clinton left office, politicians were beginning to talk about perpetual surpluses, in exactly the same way that hucksters on Wall Street were talking about a perpetual bull market. And with exactly the same outcome.

Alan Greenspan. Greenspan was a high priest of both guilt and greed. He had always warned Congress about the dangers of the deficits, but his biggest failure as Federal Reserve chairman was the day in 2001 he told Congress that the worst thing it could do was pay down the debt because that would destroy the Treasury market and the Fed’s power to control the economy.

That was the day he endorsed the Bush tax cuts. The Maestro’s endorsement gave intellectual cover to the conservatives who wanted to cut taxes, but who didn’t want to feel guilty.

Greenspan also catered to our greedy side as a serial bubble-blower. He inflated the housing bubble in the 2000s by keeping interest rates low and by refusing to regulate the shadow banking system.

George W. Bush . No one is more responsible for racking up our debt than Bush. He campaigned in 2000 promising to cut taxes in order to avoid paying down the national debt. And when the recession of 2001 arrived, he said tax cuts would revive the economy. And when the economy didn’t revive, he cut taxes some more. Tax cuts for all occasions. And it was all guilt-free

Dick Cheney. While Bush was busy cutting taxes, Cheney was busy planning the war on terror. For the first time in our history, we sent our military into battle without raising taxes at home to help pay for it. It added trillions to the debt.

David Lereah. Lereah was the chief economist for the National Association of Realtors and was perhaps the most enthusiastic and public cheerleader for the housing bubble. Even after the bubble began to deflate, Lereah still insisted that real-estate investments would never lose money.

Of course, Lereah didn’t cause the bubble all by himself, but he does embody the greed that engulfed the real estate industry, the Wall Street banks that profited from it, and the homeowners who took on more debt than they could ever hope to repay.

Grover Norquist. As the head of a powerful lobbying and campaign-finance organization, Norquist forced almost every Republican officeholder to sign a pledge to never raise taxes under any circumstance. If anyone declined to sign or dared to violate the pledge, Norquist would back a primary challenger. The threat worked.

The Norquist pledge blocked any possibility of a budget deal between Democrats and Republicans over the past two years. Democrats insisted that any plan to balance the budget must include more revenue as well as spending cuts, but Republicans held solid against any tax increase.

There are signs that Norquist could be losing his hold on the party. Several Republicans won elections this year without signing his pledge, and several incumbents have said they don’t feel bound by the pledge any more.

Barack Obama. Obama may be the perfect representative of our age, because he encapsulates our national schizophrenia over the budget. He honors both the greed and the guilt. He presided over the largest deficits in history, including a large fiscal stimulus, bailouts of the auto industry, and an expansion of the safety net.

But Obama also lectures us about the need for the government to tighten its belt, even during a recession. He wants to raise taxes, if only on a few, and he’s expressed willingness to cut into the great middle-class entitlements. It was Obama’s administration that first suggested the bargain in 2011 that created the fiscal cliff.

John Boehner. The House speaker is trapped in Grover Norquist’s world. He’s a pragmatic legislator who accepts that the government needs more revenue, but his caucus in the House doesn’t agree. In the summer of 2011, Boehner nearly forced the nation to default on its debt because he couldn’t deliver the votes necessary to raise taxes.

In the end, Boehner was forced to punt the problem down the road. Today’s fiscal cliff showdown is the result of Boehner’s inability to lead the House Republicans to a deal.

http://www.marketwatch.com/story/10-people-who-led-us-to-the-fiscal-cliff-2012-11-21?pagenumber=5

ONE MORE INSIDER TRADING STORY

A former portfolio manager for Steven A. Cohen’s SAC Capital Advisors LP was charged with what U.S. prosecutors called a record-setting insider-trading scheme that netted as much as $276 million for the hedge fund.

Mathew Martoma, 38, traded on inside tips about clinical trials of bapineuzumab, a drug intended to treat Alzheimer’s disease, prosecutors in the office of Manhattan U.S. Attorney Preet Bharara said in a criminal complaint unsealed today. The U.S. Securities and Exchange Commission sued Martoma, his former hedge fund and the doctor who allegedly passed him the tips.Martoma allegedly advised Cohen to sell shares of Wyeth LLC (PFE) and Elan Corp. (ELN), the companies that were developing the drug, before bad news about its performance was announced. Cohen’s firm sold its Elan (ELN) and Wyeth holdings to avoid losses and profited from short positions in the stocks, prosecutors said.“Mathew Martoma and his hedge fund benefitted from what might be the most lucrative inside tip of all time,” Bharara said at a press conference today. “This is certainly the most lucrative insider-trading scheme ever charged.”Martoma is the sixth current or former SAC employee implicated in alleged insider trading by U.S. prosecutors. He’s charged with conspiracy and two counts of securities fraud, a crime that carries a maximum 20-year prison term.While the SEC and prosecutors don’t say whether Cohen knew Martoma’s advice was based on illegal tips, they do allege that Martoma discussed the Elan investments with the hedge fund’s owner before the drug’s test results were out. Cohen wasn't charged or sued over the matter.

Health-Care Tips

More than 80 people have been sued by regulators or charged by prosecutors since 2008 for passing or getting inside tips about pharmaceutical, biotechnology or other health-care stocks.Martoma worked as a portfolio manager for CR Intrinsic Investors in Stamford, Connecticut, a unit of SAC Capital, according to the SEC. The agency’s suit names as defendants Martoma, CR Intrinsic and Dr. Sid Gilman, a University of Michigan neurologist. Gilman wasn’t charged criminally.

“Mathew Martoma was an exceptional portfolio manager who succeeded through hard work and the dogged pursuit of information in the public domain,” his lawyer, Charles Stillman, said in an e-mailed statement. “What happened today is only the beginning of a process that we are confident will lead to Mr. Martoma’s full exoneration.”Billionaire Cohen, 56, started SAC Capital in 1992. His hedge fund manages $14 billion. He has been deposed by SEC investigators about trades made close to news such as mergers and earnings that generated profits for his fund, a person familiar with the matter said in June. The person asked not to be identified because the investigation wasn’t public.“Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government’s inquiry,” Jonathan Gasthalter, a company spokesman, said today in an e-mailed statement.

Martoma was arrested at his home in Boca Raton, Florida, at 6:30 a.m. today, said Peter Donald, a spokesman for the Federal Bureau of Investigation in New York. He appeared before U.S. Magistrate David Brannon in West Palm Beach and was released on $5 million bond secured by two family members, said Mary Delsener, a spokeswoman for Bharara’s office. Martoma is scheduled to be in federal court in Manhattan on Nov. 26, Bharara said.

‘Manager A’

The SEC claimed Martoma used Gilman’s illegal tips to trade for CR Intrinsic as well as for “hedge fund portfolios managed by an affiliated investment adviser” and controlled by an unidentified “Portfolio Manager A.” That manager was Cohen, according to a person familiar with the matter.In the criminal complaint, prosecutors said Martoma, who specialized in health-care stocks, recommended to the “hedge fund owner” at his firm that he sell Elan and Wyeth shares before the drug-trial results were disclosed publicly. Cohen is the owner of SAC.Gilman, 80, is a professor of neurology at the University of Michigan Medical School. He served as chairman of the safety monitoring committee overseeing the bapineuzumab trial, the SEC said. The doctor has entered into a non-prosecution agreement with prosecutors.“He is cooperating with the SEC and the U.S. Attorney’s Office,” Marc Mukasey, Gilman’s lawyer, said. “We expect to settle with the SEC in short order.”The doctor was a consultant for an expert-networking firm based in Manhattan and consulted with Martoma from mid-2006 to July 2008, according to the government.

Gerson Lehrman

Gilman worked for Gerson Lehrman Group’s Scientific Advisory Board starting in 2002, according to a 2011 curriculum vitae posted online by the University of Michigan.Loren Riegelhaupt, a spokesman for the New York-based expert-network firm, declined to comment on the case. Bloomberg LP, the owner of Bloomberg News, has an agreement to offer its clients access to Gerson Lehrman consultants.Over the course of about 42 consultations, Martoma persuaded the doctor to talk about his work on the drug trial, Bharara said.The doctor passed along the generally positive safety data about the trial, according to the criminal complaint, which doesn’t identify the neurologist by name. The SEC’s complaint names Gilman as Martoma’s source.

Elan, Wyeth

Relying on the safety data, Martoma allegedly bought shares of Elan and Wyeth for his portfolio. Cohen also bought Elan and Wyeth, based on Martoma’s recommendation, prosecutors said. By the end of June 2008, SAC held about $700 million in the two companies’ stocks.“The hedge fund built up over time a massive position in Elan and Wyeth stock. The hedge fund built up this position, even though it was vocally opposed by several others at the hedge fund who were worried about the risk of that investment,” Bharara said. “Martoma was the only person at the hedge fund who was recommending establishing such a large position in Elan and Wyeth based on that drug.”In mid-July 2008, Gilman received secret data showing that bapineuzumab failed to halt progression of Alzheimer’s in patients in the clinical test, the U.S. said. The doctor e- mailed Martoma a 24-page PowerPoint presentation detailing the results, which he was scheduled to present at a medical conference on July 29, according to the U.S.“That is when Martoma, according to the complaint, had to do a spectacular about-face, because he understood that with these negative results looming, the hedge fund’s massive $700 million stake had become a terrible bet,” Bharara said. “Overnight, Martoma went from bull to bear as he tried to dig his hedge fund out of a massive hole.”

‘It’s Important’

Prosecutors said that on July 20 Martoma e-mailed Cohen to ask, “Is there a good time to catch up with you this morning? It’s important.” The two later talked for about 20 minutes, according to the complaint.After that conversation, SAC allegedly sold all its Elan shares and shorted the stock in a little more than a week. SAC also liquidated most of its Wyeth stock and took short positions, the U.S. said.During that time, SAC’s Elan trades accounted for more than one-fifth of its trading volume, Bharara said.On July 27, an unidentified “Senior Trader” at Martoma’s company e-mailed Cohen about the week’s trading activity, according to prosecutors.

Dark Pools

The e-mail said that the fund “executed a sale of over 10.5 million ELN” for four internal hedge fund accounts. The sales were carried out “quietly and effectively” over four days through dark pools and other means, and booked into accounts that had “very limited access,” according to the e- mail cited in the criminal complaint.After the results became public, Wyeth and Elan shares plummeted. Wyeth, which is now owned by Pfizer Inc., fell the most in almost six years on the news. Elan dropped the most in three years.Prosecutors said Martoma was paid a bonus of $9.38 million in January 2009, based largely on the hedge fund’s profit from the Wyeth and Elan trades.Martoma lost money in the next two years and was fired after another identified employee said in a May 2010 e-mail that he was a “one-trick pony with Elan,” according to the government.

SAC Managers

At least five other current or former SAC portfolio managers or analysts have been implicated ininsider trading, including three charged criminally by federal prosecutors in New York, including two former portfolio managers Noah Freeman and Donald Longueuil and analyst Jon Horvath.

Michael Steinberg, a portfolio manager at SAC’s Sigma Capital Management unit, has been described by federal prosecutors as an “unindicted co-conspirator” of Horvath, a former analyst he supervised who pleaded guilty to receiving and passing inside information. Longueuil, who worked for SAC Capital’s CR Intrinsic in New York from July 2008 to July 2010, was accused of giving information to Freeman, his friend.In April 2011, former SAC analyst Jonathan Hollander agreed to settle SEC allegations that he traded on inside information about a pending takeover of the Albertson’s LLC grocery chain.

The U.S., by spelling out the evidence against Martoma in the complaint filed yesterday, may be seeking to persuade him to assist in a probe of others at SAC, said Andrew Frisch, a defense attorney in New York and former federal prosecutor.“That they’re proceeding by a complaint, as opposed to an indictment, often means the government wants to convince the defendant of the wisdom of cooperation,” Frisch, who isn’t involved in the case, said in an interview. “Cooperation is always a possibility for a defendant, but it’s a question of whether he has information.”The criminal case is U.S. v. Martoma, 12-MAG-2985; and the civil case is SEC v. CR Intrinsic Investors LLC, 12-8466, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Bob Van Voris in New York at rvanvoris@bloomberg.net; Patricia Hurtado in New York at pathurtado@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

http://www.bloomberg.com/news/2012-11-20/u-s-charges-mathew-martoma-in-insider-trading-scheme.html