DealBook: New Breed of SAC Capital Hire Is at Center of Insider Trading Case

When Mathew Martoma walked onto the trading floor at SAC Capital Advisors six years ago, he represented a new breed of employee at the giant hedge fund.

Steven A. Cohen, SAC’s billionaire founder, had burnished his reputation as a market wizard by surrounding himself with hard-charging traders — many of them former college jocks and frat boys who thrived in the fund’s competitive, testosterone-fueled environment.

But the brainy and unassuming Mr. Martoma, armed with a Stanford business degree and an expertise in biomedicine, was part of a wave of SAC hires in a crack new research unit. They were just as driven but had more distinguished pedigrees, hailing from top investment banks and elite schools. They were drawn to the firm, in part, by the lavish annual bonuses Mr. Cohen bestowed upon his top performers, sometimes reaching into the tens of millions of dollars.

When Mr. Martoma walks into Federal District Court in Manhattan on Monday morning, he will represent something else: the latest in a growing list of former SAC employees who find themselves accused of breaking the law.

The case against Mr. Martoma, made in a criminal complaint filed by the government last week, represents a watershed moment in its multiyear investigation of insider trading at SAC. For the first time, prosecutors have linked Mr. Cohen to trading activity that the government contends was illegal.

Mr. Martoma has rebuffed efforts by federal authorities to persuade him to plead guilty and cooperate, said a person briefed on the investigation who was not authorized to discuss the case. But if he were to “flip,” Mr. Martoma could help the government with its investigation of Mr. Cohen.

The government has placed Mr. Martoma, 38, at the center of what it calls the most lucrative insider-trading scheme it has ever uncovered. Mr. Martoma is charged with corrupting a doctor who had access to secret drug data, then using that information to gain profits and avert losses totaling $276 million. Mr. Martoma closely collaborated with Mr. Cohen on the questionable trades, prosecutors contend. Mr. Cohen, 56, of Greenwich, Conn., has not been charged, and there is no allegation that he knew the information was confidential. Through a spokesman, Mr. Cohen said that he had at all times acted appropriately.

Charles A. Stillman, a lawyer for Mr. Martoma, who will appear before a federal magistrate judge Monday, said he expected his client to be exonerated.

But with Mr. Martoma’s arrest last week, the clouds over SAC, which is based in Stamford, Conn., and Mr. Cohen have darkened. The government has now implicated five former SAC employees in its sweeping investigation into insider trading; three have admitted their crimes. Three other SAC alumni have also been charged with illegal trading after they left the firm; two have pleaded guilty.

Former employees of Mr. Cohen, all of whom spoke on the condition of anonymity, said that the case against Mr. Martoma highlighted SAC’s high-stress, pressure-packed culture. They described a ruthless place where those who helped Mr. Cohen make money would earn fortunes, while laggards could be fired abruptly, even for a single wrong-way trade.

Though SAC, with about 1,000 employees, manages about $14 billion in assets and has pushed into more esoteric investment strategies, at its core the firm buys and sells stocks. Mr. Cohen and his staff are known for relentlessly digging for information about publicly traded companies to form a “mosaic,” building a complete picture of the company’s prospects that gives the firm an edge over other investors.

SAC hired Mr. Martoma to help Mr. Cohen gain that edge. The son of Indian immigrants, Mr. Martoma was born Ajai Mathew Mariamdani Thomas, but changed his name in 2003, according to legal records. Raised in Merritt Island, Fla., outside Cape Canaveral, Mr. Martoma graduated summa cum laude from Duke University in 1995, where he studied biomedicine, ethics and public policy. After college, Mr. Martoma worked in Washington at the National Human Genome Research Institute.

He spent a year and a half at Harvard Law School, then dropped out to earn a business degree at Stanford University. He blended his passion for medicine and a desire to work on Wall Street by pursuing a career as a stock analyst covering health care companies. After a stint at a smaller hedge fund, Sirios Capital Management in Boston, Mr. Martoma joined SAC.

He became part of a new unit, CR Intrinsic, which was set up as a research engine of SAC. CR Intrinsic (the CR stands for Cumulative Return) was led by Matthew Grossman, an ambitious young analyst who became Mr. Cohen’s right-hand man. Mr. Grossman had worked at Tiger Management, the hedge fund known for its rigorous research and longer-term investment horizon.

With a deep network of contacts in the pharmaceutical and biotech fields, Mr. Martoma made a mark at CR Intrinsic. The volatile health care stocks in which Mr. Martoma specialized had long been favorites of Mr. Cohen’s, offering the potential for big returns through betting on the outcome of events like clinical trials for promising drugs.

To bolster his knowledge, Mr. Martoma tapped into expert-network firms, which employ consultants who match money managers with industry specialists, including public company employees.

For an information-driven hedge fund like SAC, the temptation to exploit the expert-network relationship was immense, two former employees said.

Two of the former SAC employees who have admitted to insider trading said they used expert-network firms to obtain secret information about public companies. And of the roughly 70 insider trading cases that federal prosecutors in Manhattan have brought in the last three years, more than a dozen have involved expert networks.

Mr. Martoma’s case began in 2006, when the expert-network firm Gerson Lehrman Group connected him to Sidney Gilman, a neurology professor at the University of Michigan and a specialist in Alzheimer’s disease. Dr. Gilman, who moonlighted as a consultant for Gerson Lehrman, helped oversee clinical trials for bapineuzumab, or bapi, a new Alzheimer’s drug being jointly developed by Elan and Wyeth.

He also brazenly leaked to Mr. Martoma secret data about the trials throughout 2008, according to the government, violating his duty to the drug companies and breaching his agreement with Gerson Lehrman not to divulge confidential information to money managers. Dr. Gilman earned $108,000 from his work for SAC, the government said.

At first, Dr. Gilman’s positive updates on the Alzheimer’s drug trials emboldened SAC to make big bets on Elan and Wyeth, prosecutors said. Mr. Martoma worked closely with Mr. Cohen on the investments, highlighting the drug companies in his weekly “best ideas” list submitted to Mr. Cohen. SAC accumulated $700 million worth of Elan and Wyeth shares, making it one of the fund’s largest bets.

Prosecutors say that in July 2008 Dr. Gilman received more complete results about bapi showing problems with the drug’s efficacy. He then shared those results with Mr. Martoma, the government contends.

With the public announcement of the data just a week away, Mr. Martoma e-mailed Mr. Cohen on a Sunday, according to the complaint. Within the hour, the two were on the phone and spoke for 20 minutes, prosecutors say.

Over several days, SAC not only sold its entire positions in Elan and Wyeth, but shorted, or bet against, the drug companies’ shares, the government said. On July 29, the companies announced results of the drug trial and their shares sank. SAC avoided about $194 million in losses by selling the stocks and then made $83 million by shorting them, according to court filings. Still, SAC paid Mr. Martoma a $9.4 million bonus in 2008 that was largely attributable to his contributions on the Elan and Wyeth trades, prosecutors said. But the firm fired him in early 2010 after his stock picks flagged. The case against Mr. Martoma stemmed in part from a referral made to federal securities regulators. In 2008, the Financial Industry Regulatory Authority observed unusual short-sales in the drug stocks and noted the abnormal activity, regulators said.

Prosecutors recently reached a nonprosecution agreement with Dr. Gilman, meaning they will not charge him. The Justice Department rarely strikes nonprosecution agreements with individuals. The government’s deal with Dr. Gilman, legal experts say, could put pressure on Mr. Martoma to strike a plea deal and cooperate.

Alain Delaquérière contributed reporting.

A version of this article appeared in print on 11/26/2012, on page B1 of the NewYork edition with the headline: New Breed of SAC Capital Hire Is at Center of Insider Trading Case.
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The New Old Age Blog: Turning a Home Into a Hospital

At age 96, my mother moved to New York City to live with me and my family in our two-bedroom Manhattan apartment after becoming increasingly isolated while living alone in Florida. She moved into my sons’ bedroom surrounded by all manner of adolescent paraphernalia, including every style of trendy sneakers, a giant papier-mâché statue of Michael Jordan and a poster of Bob Marley.

Three years later, at age 99, she was hospitalized and diagnosed with pancreatic cancer. Because of her advanced age, there was little to do to except make the last months of her life more comfortable. Her doctor arranged for home hospice care through Calvary. But part of me wanted to place her in a nursing home.

The idea of hospice care in my home overwhelmed me. I did not want my apartment to become a nursing facility, and the idea of personally taking care of my mother was frightening. I was preoccupied with thoughts and fears of losing her, and I was very afraid of witnessing her physical deterioration and her death.

As a psychotherapist in private practice, I treat people with emotional problems like anxiety and depression. I am introspective enough to know that I am comfortable with treating the mind, but squeamish about medical problems, especially serious medical issues.

Now my mother was dying, and I had to live with the uncertainty of what was going to happen. When would she no longer be able to bathe herself? Was she going to be bedridden? Incontinent?

Step by step, I overcame my fears, accepting the reality of our new situation. Looking back, the choice was inevitable — and I am grateful I took the steps of that life-changing journey.

My husband encouraged me to take on the challenge of caring for my mother in our home. He thought it would be cruel to put her in a nursing home. Easy for him to say, I thought, since my mother’s physical care would fall predominately on me.

Upset over my dilemma, I was crying. My mother, in her hospital bed, asked, “Why?”

“I don’t know how I can continue taking care of you in our home,” I told her. But I asked her what she wanted to do.

“I want to go home,” she said. “We will manage.”

So she left the hospital to again live with us.

The Calvary hospice nurse walked me through all the steps of home hospice care. After the first home visit, the nurse ordered an oxygen tank and told me there could be no smoking in the home or even in the hallway outside my apartment door, because the oxygen was flammable.

That made me uneasy. Although I was instructed how to use the tank, I was anxious that I would forget how to use it when the moment arrived that my mother had difficulty breathing. In my panic, I called the medical home care supply company to take the tank back. When my mother’s doctor told me that it was critical to have the oxygen available in case of an emergency, I relented. I was terrified that she might suffer.

My mother at that point had her full faculties and was able to get around. She could even walk, albeit very slowly, to the senior citizen’s center on our block and to the Jewish Community Center across the street, where she played mah-jongg and canasta. That stopped soon, however, and I had to order a wheelchair for her to use when she went out.

Calvary provided me with a home health aide for five hours a day and a social worker. That was helpful but stressful. Because of my work as a therapist, coordinating schedules was a challenge.

As she grew more ill, my mother became too weak to shower, dress or go to bathroom by herself. I had to hire an additional home health aide for the afternoon and for full days on weekends. Eventually, I needed to get an overnight aide.

I was surrounded by an army of hospital-like caretakers who used hand sanitizer immediately upon entering the apartment, ate in our kitchen, showered in the bathroom and slept with my mother in one of our two bedrooms. I felt the loss of control and a sense of chaos, which was made worse when my youngest son returned home after graduating from college and underwent emergency surgery for a torn A.C.L. He generously gave up his bedroom to my mother (and to the aide who slept there at night) and camped out in the living room.

My house had truly been turned upside down. But what kept me sane was knowing that the chaos was temporary, and that we were providing my mother with the care she needed, in the setting that had been her choice.

I had to learn to trust that the aides would act in my mother’s best interest. In fact, most of them were generous and devoted to my mother’s care to the end.

Her last days were not without a touch of humor. One night, the aide called me into the room telling me that my mother, still with her full faculties, was “seeing smoke.” I thought, “Is she hallucinating?”

I sat down on the bed. My mother pointed to the Bob Marley poster. She asked, “Is that famous man smoking?” She had looked at that poster for three years and never asked until then.

But another night, around 1 a.m., my son overheard my mother yelling, “Don’t touch me.” He found the nighttime aide pushing my mother back into bed. The aide wanted to sleep through the night and did not want to be bothered taking my mother to the bathroom. I fired the aide the next day.

Gradually, I surrendered to the reality that my apartment had been turned into a nursing home. My mother now had an oxygen tank, a walker, a wheelchair, a shower chair, a commode, Depends and bed pads.

Still, I had said from the beginning that I did not want a hospital bed in my home. Its name alone symbolized the transformation of my home into a hospital. But two days before my mother’s death, I relented. My mother could not get up from the bed that she had been using. She needed the adjustable bed to lift and transfer her.

With the arrival of that bed, I finally accepted the new reality: my home was indeed transformed into a nursing home, despite all my initial fears about living with my dying mother in that environment.

At 99, just 8 months short of a century, my mother died in my home surrounded by family and the Bob Marley poster. It was a peaceful passage. She died with grace and dignity.

As I reflect on the experience, I am glad that I was able to be with my mother through the end of her journey. It was tough to watch this once strong, vital woman become thin and fragile. And as my last living parent, she was the buffer between myself and the reality of my mortality.

Still, the experience was emotionally rich and liberating. And, in the end, we were both at peace.

Linda G. Beeler is a psychotherapist in private practice in Manhattan.

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The New Old Age Blog: Turning a Home Into a Hospital

At age 96, my mother moved to New York City to live with me and my family in our two-bedroom Manhattan apartment after becoming increasingly isolated while living alone in Florida. She moved into my sons’ bedroom surrounded by all manner of adolescent paraphernalia, including every style of trendy sneakers, a giant papier-mâché statue of Michael Jordan and a poster of Bob Marley.

Three years later, at age 99, she was hospitalized and diagnosed with pancreatic cancer. Because of her advanced age, there was little to do to except make the last months of her life more comfortable. Her doctor arranged for home hospice care through Calvary. But part of me wanted to place her in a nursing home.

The idea of hospice care in my home overwhelmed me. I did not want my apartment to become a nursing facility, and the idea of personally taking care of my mother was frightening. I was preoccupied with thoughts and fears of losing her, and I was very afraid of witnessing her physical deterioration and her death.

As a psychotherapist in private practice, I treat people with emotional problems like anxiety and depression. I am introspective enough to know that I am comfortable with treating the mind, but squeamish about medical problems, especially serious medical issues.

Now my mother was dying, and I had to live with the uncertainty of what was going to happen. When would she no longer be able to bathe herself? Was she going to be bedridden? Incontinent?

Step by step, I overcame my fears, accepting the reality of our new situation. Looking back, the choice was inevitable — and I am grateful I took the steps of that life-changing journey.

My husband encouraged me to take on the challenge of caring for my mother in our home. He thought it would be cruel to put her in a nursing home. Easy for him to say, I thought, since my mother’s physical care would fall predominately on me.

Upset over my dilemma, I was crying. My mother, in her hospital bed, asked, “Why?”

“I don’t know how I can continue taking care of you in our home,” I told her. But I asked her what she wanted to do.

“I want to go home,” she said. “We will manage.”

So she left the hospital to again live with us.

The Calvary hospice nurse walked me through all the steps of home hospice care. After the first home visit, the nurse ordered an oxygen tank and told me there could be no smoking in the home or even in the hallway outside my apartment door, because the oxygen was flammable.

That made me uneasy. Although I was instructed how to use the tank, I was anxious that I would forget how to use it when the moment arrived that my mother had difficulty breathing. In my panic, I called the medical home care supply company to take the tank back. When my mother’s doctor told me that it was critical to have the oxygen available in case of an emergency, I relented. I was terrified that she might suffer.

My mother at that point had her full faculties and was able to get around. She could even walk, albeit very slowly, to the senior citizen’s center on our block and to the Jewish Community Center across the street, where she played mah-jongg and canasta. That stopped soon, however, and I had to order a wheelchair for her to use when she went out.

Calvary provided me with a home health aide for five hours a day and a social worker. That was helpful but stressful. Because of my work as a therapist, coordinating schedules was a challenge.

As she grew more ill, my mother became too weak to shower, dress or go to bathroom by herself. I had to hire an additional home health aide for the afternoon and for full days on weekends. Eventually, I needed to get an overnight aide.

I was surrounded by an army of hospital-like caretakers who used hand sanitizer immediately upon entering the apartment, ate in our kitchen, showered in the bathroom and slept with my mother in one of our two bedrooms. I felt the loss of control and a sense of chaos, which was made worse when my youngest son returned home after graduating from college and underwent emergency surgery for a torn A.C.L. He generously gave up his bedroom to my mother (and to the aide who slept there at night) and camped out in the living room.

My house had truly been turned upside down. But what kept me sane was knowing that the chaos was temporary, and that we were providing my mother with the care she needed, in the setting that had been her choice.

I had to learn to trust that the aides would act in my mother’s best interest. In fact, most of them were generous and devoted to my mother’s care to the end.

Her last days were not without a touch of humor. One night, the aide called me into the room telling me that my mother, still with her full faculties, was “seeing smoke.” I thought, “Is she hallucinating?”

I sat down on the bed. My mother pointed to the Bob Marley poster. She asked, “Is that famous man smoking?” She had looked at that poster for three years and never asked until then.

But another night, around 1 a.m., my son overheard my mother yelling, “Don’t touch me.” He found the nighttime aide pushing my mother back into bed. The aide wanted to sleep through the night and did not want to be bothered taking my mother to the bathroom. I fired the aide the next day.

Gradually, I surrendered to the reality that my apartment had been turned into a nursing home. My mother now had an oxygen tank, a walker, a wheelchair, a shower chair, a commode, Depends and bed pads.

Still, I had said from the beginning that I did not want a hospital bed in my home. Its name alone symbolized the transformation of my home into a hospital. But two days before my mother’s death, I relented. My mother could not get up from the bed that she had been using. She needed the adjustable bed to lift and transfer her.

With the arrival of that bed, I finally accepted the new reality: my home was indeed transformed into a nursing home, despite all my initial fears about living with my dying mother in that environment.

At 99, just 8 months short of a century, my mother died in my home surrounded by family and the Bob Marley poster. It was a peaceful passage. She died with grace and dignity.

As I reflect on the experience, I am glad that I was able to be with my mother through the end of her journey. It was tough to watch this once strong, vital woman become thin and fragile. And as my last living parent, she was the buffer between myself and the reality of my mortality.

Still, the experience was emotionally rich and liberating. And, in the end, we were both at peace.

Linda G. Beeler is a psychotherapist in private practice in Manhattan.

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Gadgetwise Blog: A Phone Cradle for More GPS Power

Magellan may be best known for its dashboard GPS navigation products, particularly its oversize offerings like the Magellan RoadMate 9250T–LMB with its 7-inch screen.

But now it is making a product that helps bring a small screen to your dashboard, a GPS car kit that adds a more powerful antenna, speaker and charging for an iPhone 3GS, 4 and 4S, as well as the third- and fourth-generation iPod Touch.

The $100 cradle has a 30-pin connector at the bottom and a secure ratcheting clamp at the top. There is even an  adjustable bumper to push up against the back of the phone so it won’t rattle around. The whole assembly attaches to a suction cup mount that sticks on your windshield.

In a test using the car kit and a stand-alone iPhone, the car kit produced directions a little bit faster than the unmounted iPhone – and this was in an area with strong reception.

Of course, Magellan would like you to use it with its $50 navigation app — which happens to be quite good. But you are not limited to its app. The cradle will work with any navigation software you care to put on screen.

One thing that’s a bit quirky: Although the device plugs in, you still have to connect the audio wirelessly using Bluetooth, which appears to interfere with my car’s hands-free Bluetooth system.

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As Rebels Gain, Congo Again Slips Into Chaos





GOMA, Democratic Republic of Congo — The lights are out in most of Goma. There is little water. The prison is an empty, garbage-strewn wasteland with its rusty front gate swinging wide open and a three-foot hole punched through the back wall, letting loose 1,200 killers, rapists, rogue soldiers and other criminals.




Now, rebel fighters are going house to house arresting people, many of whom have not been seen again by their families.


“You say the littlest thing and they disappear you,” said an unemployed man named Luke.


In the past week, the rebels have been unstoppable, steamrolling through one town after another, seizing this provincial capital, and eviscerating a dysfunctional Congolese Army whose drunken soldiers stumble around with rocket-propelled grenades and whose chief of staff was suspended for selling crates of ammunition to elephant poachers.


Riots are exploding across the country — in Bukavu, Butembo, Bunia, Kisangani and Kinshasa, the capital, a thousand miles away. Mobs are pouring into streets, burning down government buildings and demanding the ouster of Congo’s weak and widely despised president, Joseph Kabila.


Once again, chaos is courting Congo. And one pressing question is, why — after all the billions of dollars spent on peacekeepers, the recent legislation passed on Capitol Hill to cut the link between the illicit mineral trade and insurrection, and all the aid money and diplomatic capital — is this vast nation in the heart of Africa descending to where it was more than 10 years ago when foreign armies and marauding rebels carved it into fiefs?


“We haven’t really touched the root cause,” said Aloys Tegera, a director for the Pole Institute, a research institute in Goma.


He said Congo’s chronic instability is rooted in very local tensions over land, power and identity, especially along the Rwandan and Ugandan borders. “But no one wants to touch this because it’s too complicated,” he added.


The most realistic solution, said another Congo analyst, is not a formal peace process driven by diplomats but “a peace among all the dons, like Don Corleone imposed in New York.”


Congo’s problems have been festering for years, wounds that never quite scabbed over.


But last week there was new urgency after hundreds of rebel fighters, wearing rubber swamp boots and with belt-fed machine guns slung across their backs, marched into Goma, the capital of North Kivu Province and one of the country’s most important cities.


The rebels, called the M23, are a heavily armed paradox. On one hand, they are ruthless. Human rights groups have documented how they have slaughtered civilians, pulling confused villagers out of their huts in the middle of the night and shooting them in the head.


On the other hand, the M23 are able administrators — seemingly far better than the Congolese government, evidenced by a visit in recent days to their stronghold, Rutshuru, a small town about 45 miles from Goma.


In Rutshuru, there are none of those ubiquitous plastic bags twisted in the trees, like in so many other parts of Congo. The gravel roads have been swept clean and the government offices are spotless. Hand-painted signs read: “M23 Stop Corruption.” The rebels even have green thumbs, planting thousands of trees in recent months to fight soil erosion.


“We are not a rebellion,” said Benjamin Mbonimpa, an electrical engineer, a bush fighter and now a top rebel administrator. “We are a revolution.”


Their aims, he said, were to overthrow the government and set up a more equitable, decentralized political system. This is why the rebels have balked at negotiating with Mr. Kabila, though this weekend several rebels said that the pressure was increasing on them to compromise, especially coming from Western countries.


On Sunday, rebel forces and government troops were still squared off, just a few miles apart, down the road from Goma.


The M23 rebels are widely believed to be covertly supported by Rwanda, which has a long history of meddling in Congo, its neighbor blessed with gold, diamonds and other glittering mineral riches. The Rwandan government strenuously denies supplying weapons to the M23 or trying to annex eastern Congo. Rwanda has often denied any clandestine involvement in this country, only to have the denials later exposed as lies.


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Lobbying, a Windfall and a Leader’s Family


Gilles Sabrie for The New York Times


Ping An, one of China’s largest financial services companies, is building a 115-story office tower in Shenzhen. The company is a $50 billion powerhouse now worth more than A.I.G., MetLife or Prudential.







SHENZHEN, China — The head of a financially troubled insurer was pushing Chinese officials to relax rules that required breaking up the company in the aftermath of the Asian financial crisis.




The survival of Ping An Insurance was at stake, officials were told in the fall of 1999. Direct appeals were made to the vice premier at the time, Wen Jiabao, as well as the then-head of China’s central bank — two powerful officials with oversight of the industry.


“I humbly request that the vice premier lead and coordinate the matter from a higher level,” Ma Mingzhe, chairman of Ping An, implored in a letter to Mr. Wen that was reviewed by The New York Times.


Ping An was not broken up.


The successful outcome of the lobbying effort would prove monumental.


Ping An went on to become one of China’s largest financial services companies, a $50 billion powerhouse now worth more than A.I.G., MetLife or Prudential. And behind the scenes, shares in Ping An that would be worth billions of dollars once the company rebounded were acquired by relatives of Mr. Wen.


The Times reported last month that the relatives of Mr. Wen, who became prime minister in 2003, had grown extraordinarily wealthy during his leadership, acquiring stakes in tourist resorts, banks, jewelers, telecommunications companies and other business ventures.


The greatest source of wealth, by far, The Times investigation has found, came from the shares in Ping An bought about eight months after the insurer was granted a waiver to the requirement that big financial companies be broken up.


Long before most investors could buy Ping An stock, Taihong, a company that would soon be controlled by Mr. Wen’s relatives, acquired a large stake in Ping An from state-owned entities that held shares in the insurer, regulatory and corporate records show. And by all appearances, Taihong got a sweet deal. The shares were bought in December 2002 for one-quarter of the price that another big investor — the British bank HSBC Holdings — paid for its shares just two months earlier, according to interviews and public filings.


By June 2004, the shares held by the Wen relatives had already quadrupled in value, even before the company was listed on the Hong Kong Stock Exchange. And by 2007, the initial $65 million investment made by Taihong would be worth $3.7 billion.


Corporate records show that the relatives’ stake of that investment most likely peaked at $2.2 billion in late 2007, the last year in which Taihong’s shareholder records were publicly available. Because the company is no longer listed in Ping An’s public filings, it is unclear if the relatives continue to hold shares.


It is also not known whether Mr. Wen or the central bank chief at the time, Dai Xianglong, personally intervened on behalf of Ping An’s request for a waiver, or if Mr. Wen was even aware of the stakes held by his relatives.


But internal Ping An documents, government filings and interviews with bankers and former senior executives at Ping An indicate that both the vice premier’s office and the central bank were among the regulators involved in the Ping An waiver meetings and who had the authority to sign off on the waiver.


Only two large state-run financial institutions were granted similar waivers, filings show, while three of China’s big state-run insurance companies were forced to break up. Many of the country’s big banks complied with the breakup requirement — enforced after the financial crisis because of concerns about the stability of the financial system — by selling their assets in other institutions.


Ping An issued a statement to The Times saying the company strictly complies with rules and regulations, but does not know the backgrounds of all entities behind shareholders. The company also said “it is the legitimate right of shareholders to buy and sell shares between themselves.”


In Beijing, China’s foreign ministry did not return calls seeking comment for this article. Earlier, a Foreign Ministry spokesman sharply criticized the investigation by The Times into the finances of Mr. Wen’s relatives, saying it “smears China and has ulterior motives.”


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Indian Prostitutes’ New Autonomy Imperils AIDS Fight


Kuni Takahashi for The New York Times


Sex workers in Mumbai’s long-established red-light district, where brothels are dwindling.







MUMBAI, India — Millions once bought sex in the narrow alleys of Kamathipura, a vast red-light district here. But prostitutes with inexpensive mobile phones are luring customers elsewhere, and that is endangering the astonishing progress India has made against AIDS.




Indeed, the recent closings of hundreds of ancient brothels, while something of an economic victory for prostitutes, may one day cost them, and many others, their lives.


“The place where sex happens turns out to be an important H.I.V. prevention point,” said Saggurti Niranjan, program associate of the Population Council. “And when we don’t know where that is, we can’t help stop the transmission.”


Cellphones, those tiny gateways to modernity, have recently allowed prostitutes to shed the shackles of brothel madams and strike out on their own. But that independence has made prostitutes far harder for government and safe-sex counselors to trace. And without the advice and free condoms those counselors provide, prostitutes and their customers are returning to dangerous ways.


Studies show that prostitutes who rely on cellphones are more susceptible to H.I.V. because they are far less likely than their brothel-based peers to require their clients to wear condoms.


In interviews, prostitutes said they had surrendered some control in the bedroom in exchange for far more control over their incomes.


“Now, I get the full cash in my hand before we start,” said Neelan, a prostitute with four children whose side business in sex work is unknown to her husband and neighbors. (Neelan is a professional name, not her real one.)


“Earlier, if the customer got scared and didn’t go all the way, the madam might not charge the full amount,” she explained. “But if they back out now, I say that I have removed all my clothes and am going to keep the money.”


India has been the world’s most surprising AIDS success story. Though infections did not appear in India until 1986, many predicted the nation would soon become the epidemic’s focal point. In 2002, the C.I.A.’s National Intelligence Council predicted that India would have as many as 25 million AIDS cases by 2010. Instead, India now has about 1.5 million.


An important reason the disease never took extensive hold in India is that most women here have fewer sexual partners than in many other developing countries. Just as important was an intensive effort underwritten by the World Bank and the Bill and Melinda Gates Foundation to target high-risk groups like prostitutes, gay men and intravenous drug users.


But the Gates Foundation is now largely ending its oversight and support for AIDS prevention in India, just as efforts directed at prostitutes are becoming much more difficult. Experts say it is too early to identify how much H.I.V. infections might rise.


“Nowadays, the mobility of sex workers is huge, and contacting them is very difficult,” said Ashok Alexander, the former director in India of the Gates Foundation. “It’s a totally different challenge, and the strategies will also have to change.”


An example of the strategies that had been working can be found in Delhi’s red-light district on Garstin Bastion Road near the old Delhi railway station, where brothels have thrived since the 16th century. A walk through dark alleys, past blind beggars and up narrow, steep and deeply worn stone staircases brings customers into brightly lighted rooms teeming with scores of women brushing each other’s hair, trying on new dresses, eating snacks, performing the latest Bollywood dances, tending small children and disappearing into tiny bedrooms with nervous men who come out moments later buttoning their trousers.


A 2009 government survey found 2,000 prostitutes at Garstin Bastion (also known as G. B.) Road who served about 8,000 men a day. The government estimated that if it could deliver as many as 320,000 free condoms each month and train dozens of prostitutes to counsel safe-sex practices to their peers, AIDS infections could be significantly reduced. Instead of broadcasting safe-sex messages across the country — an expensive and inefficient strategy commonly employed in much of the world — it encircled Garstin Bastion with a firebreak of posters with messages like “Don’t take a risk, use a condom” and “When a condom is in, risk is out.”


Surprising many international AIDS experts, these and related tactics worked. Studies showed that condom use among clients of prostitutes soared.


“To the credit of the Indian strategists, their focus on these high-risk groups paid off,” said Dr. Peter Piot, the former executive director of U.N.AIDS and now director of the London School of Hygiene and Tropical Medicine. A number of other countries, following India’s example, have achieved impressive results over the past decade as well, according to the latest United Nations report, which was released last week.


Sruthi Gottipati contributed reporting in Mumbai and New Delhi.



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Indian Prostitutes’ New Autonomy Imperils AIDS Fight


Kuni Takahashi for The New York Times


Sex workers in Mumbai’s long-established red-light district, where brothels are dwindling.







MUMBAI, India — Millions once bought sex in the narrow alleys of Kamathipura, a vast red-light district here. But prostitutes with inexpensive mobile phones are luring customers elsewhere, and that is endangering the astonishing progress India has made against AIDS.




Indeed, the recent closings of hundreds of ancient brothels, while something of an economic victory for prostitutes, may one day cost them, and many others, their lives.


“The place where sex happens turns out to be an important H.I.V. prevention point,” said Saggurti Niranjan, program associate of the Population Council. “And when we don’t know where that is, we can’t help stop the transmission.”


Cellphones, those tiny gateways to modernity, have recently allowed prostitutes to shed the shackles of brothel madams and strike out on their own. But that independence has made prostitutes far harder for government and safe-sex counselors to trace. And without the advice and free condoms those counselors provide, prostitutes and their customers are returning to dangerous ways.


Studies show that prostitutes who rely on cellphones are more susceptible to H.I.V. because they are far less likely than their brothel-based peers to require their clients to wear condoms.


In interviews, prostitutes said they had surrendered some control in the bedroom in exchange for far more control over their incomes.


“Now, I get the full cash in my hand before we start,” said Neelan, a prostitute with four children whose side business in sex work is unknown to her husband and neighbors. (Neelan is a professional name, not her real one.)


“Earlier, if the customer got scared and didn’t go all the way, the madam might not charge the full amount,” she explained. “But if they back out now, I say that I have removed all my clothes and am going to keep the money.”


India has been the world’s most surprising AIDS success story. Though infections did not appear in India until 1986, many predicted the nation would soon become the epidemic’s focal point. In 2002, the C.I.A.’s National Intelligence Council predicted that India would have as many as 25 million AIDS cases by 2010. Instead, India now has about 1.5 million.


An important reason the disease never took extensive hold in India is that most women here have fewer sexual partners than in many other developing countries. Just as important was an intensive effort underwritten by the World Bank and the Bill and Melinda Gates Foundation to target high-risk groups like prostitutes, gay men and intravenous drug users.


But the Gates Foundation is now largely ending its oversight and support for AIDS prevention in India, just as efforts directed at prostitutes are becoming much more difficult. Experts say it is too early to identify how much H.I.V. infections might rise.


“Nowadays, the mobility of sex workers is huge, and contacting them is very difficult,” said Ashok Alexander, the former director in India of the Gates Foundation. “It’s a totally different challenge, and the strategies will also have to change.”


An example of the strategies that had been working can be found in Delhi’s red-light district on Garstin Bastion Road near the old Delhi railway station, where brothels have thrived since the 16th century. A walk through dark alleys, past blind beggars and up narrow, steep and deeply worn stone staircases brings customers into brightly lighted rooms teeming with scores of women brushing each other’s hair, trying on new dresses, eating snacks, performing the latest Bollywood dances, tending small children and disappearing into tiny bedrooms with nervous men who come out moments later buttoning their trousers.


A 2009 government survey found 2,000 prostitutes at Garstin Bastion (also known as G. B.) Road who served about 8,000 men a day. The government estimated that if it could deliver as many as 320,000 free condoms each month and train dozens of prostitutes to counsel safe-sex practices to their peers, AIDS infections could be significantly reduced. Instead of broadcasting safe-sex messages across the country — an expensive and inefficient strategy commonly employed in much of the world — it encircled Garstin Bastion with a firebreak of posters with messages like “Don’t take a risk, use a condom” and “When a condom is in, risk is out.”


Surprising many international AIDS experts, these and related tactics worked. Studies showed that condom use among clients of prostitutes soared.


“To the credit of the Indian strategists, their focus on these high-risk groups paid off,” said Dr. Peter Piot, the former executive director of U.N.AIDS and now director of the London School of Hygiene and Tropical Medicine. A number of other countries, following India’s example, have achieved impressive results over the past decade as well, according to the latest United Nations report, which was released last week.


Sruthi Gottipati contributed reporting in Mumbai and New Delhi.



Read More..

Indian Prostitutes’ New Autonomy Imperils AIDS Fight


Kuni Takahashi for The New York Times


Sex workers in Mumbai’s long-established red-light district, where brothels are dwindling.







MUMBAI, India — Millions once bought sex in the narrow alleys of Kamathipura, a vast red-light district here. But prostitutes with inexpensive mobile phones are luring customers elsewhere, and that is endangering the astonishing progress India has made against AIDS.




Indeed, the recent closings of hundreds of ancient brothels, while something of an economic victory for prostitutes, may one day cost them, and many others, their lives.


“The place where sex happens turns out to be an important H.I.V. prevention point,” said Saggurti Niranjan, program associate of the Population Council. “And when we don’t know where that is, we can’t help stop the transmission.”


Cellphones, those tiny gateways to modernity, have recently allowed prostitutes to shed the shackles of brothel madams and strike out on their own. But that independence has made prostitutes far harder for government and safe-sex counselors to trace. And without the advice and free condoms those counselors provide, prostitutes and their customers are returning to dangerous ways.


Studies show that prostitutes who rely on cellphones are more susceptible to H.I.V. because they are far less likely than their brothel-based peers to require their clients to wear condoms.


In interviews, prostitutes said they had surrendered some control in the bedroom in exchange for far more control over their incomes.


“Now, I get the full cash in my hand before we start,” said Neelan, a prostitute with four children whose side business in sex work is unknown to her husband and neighbors. (Neelan is a professional name, not her real one.)


“Earlier, if the customer got scared and didn’t go all the way, the madam might not charge the full amount,” she explained. “But if they back out now, I say that I have removed all my clothes and am going to keep the money.”


India has been the world’s most surprising AIDS success story. Though infections did not appear in India until 1986, many predicted the nation would soon become the epidemic’s focal point. In 2002, the C.I.A.’s National Intelligence Council predicted that India would have as many as 25 million AIDS cases by 2010. Instead, India now has about 1.5 million.


An important reason the disease never took extensive hold in India is that most women here have fewer sexual partners than in many other developing countries. Just as important was an intensive effort underwritten by the World Bank and the Bill and Melinda Gates Foundation to target high-risk groups like prostitutes, gay men and intravenous drug users.


But the Gates Foundation is now largely ending its oversight and support for AIDS prevention in India, just as efforts directed at prostitutes are becoming much more difficult. Experts say it is too early to identify how much H.I.V. infections might rise.


“Nowadays, the mobility of sex workers is huge, and contacting them is very difficult,” said Ashok Alexander, the former director in India of the Gates Foundation. “It’s a totally different challenge, and the strategies will also have to change.”


An example of the strategies that had been working can be found in Delhi’s red-light district on Garstin Bastion Road near the old Delhi railway station, where brothels have thrived since the 16th century. A walk through dark alleys, past blind beggars and up narrow, steep and deeply worn stone staircases brings customers into brightly lighted rooms teeming with scores of women brushing each other’s hair, trying on new dresses, eating snacks, performing the latest Bollywood dances, tending small children and disappearing into tiny bedrooms with nervous men who come out moments later buttoning their trousers.


A 2009 government survey found 2,000 prostitutes at Garstin Bastion (also known as G. B.) Road who served about 8,000 men a day. The government estimated that if it could deliver as many as 320,000 free condoms each month and train dozens of prostitutes to counsel safe-sex practices to their peers, AIDS infections could be significantly reduced. Instead of broadcasting safe-sex messages across the country — an expensive and inefficient strategy commonly employed in much of the world — it encircled Garstin Bastion with a firebreak of posters with messages like “Don’t take a risk, use a condom” and “When a condom is in, risk is out.”


Surprising many international AIDS experts, these and related tactics worked. Studies showed that condom use among clients of prostitutes soared.


“To the credit of the Indian strategists, their focus on these high-risk groups paid off,” said Dr. Peter Piot, the former executive director of U.N.AIDS and now director of the London School of Hygiene and Tropical Medicine. A number of other countries, following India’s example, have achieved impressive results over the past decade as well, according to the latest United Nations report, which was released last week.


Sruthi Gottipati contributed reporting in Mumbai and New Delhi.



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White House Presses for Drone Rule Book





WASHINGTON — Facing the possibility that President Obama might not win a second term, his administration accelerated work in the weeks before the election to develop explicit rules for the targeted killing of terrorists by unmanned drones, so that a new president would inherit clear standards and procedures, according to two administration officials.




The matter may have lost some urgency after Nov. 6. But with more than 300 drone strikes and some 2,500 people killed by the Central Intelligence Agency and the military since Mr. Obama first took office, the administration is still pushing to make the rules formal and resolve internal uncertainty and disagreement about exactly when lethal action is justified.


Mr. Obama and his advisers are still debating whether remote-control killing should be a measure of last resort against imminent threats to the United States, or a more flexible tool, available to help allied governments attack their enemies or to prevent militants from controlling territory.


Though publicly the administration presents a united front on the use of drones, behind the scenes there is longstanding tension. The Defense Department and the C.I.A. continue to press for greater latitude to carry out strikes; Justice Department and State Department officials, and the president’s counterterrorism adviser, John O. Brennan, have argued for restraint, officials involved in the discussions say.


More broadly, the administration’s legal reasoning has not persuaded many other countries that the strikes are acceptable under international law. For years before the Sept. 11, 2001, attacks, the United States routinely condemned targeted killings of suspected terrorists by Israel, and most countries still object to such measures.


But since the first targeted killing by the United States in 2002, two administrations have taken the position that the United States is at war with Al Qaeda and its allies and can legally defend itself by striking its enemies wherever they are found.


Partly because United Nations officials know that the United States is setting a legal and ethical precedent for other countries developing armed drones, the U.N. plans to open a unit in Geneva early next year to investigate American drone strikes.


The attempt to write a formal rule book for targeted killing began last summer after news reports on the drone program, started under President George W. Bush and expanded by Mr. Obama, revealed some details of the president’s role in the shifting procedures for compiling “kill lists” and approving strikes. Though national security officials insist that the process is meticulous and lawful, the president and top aides believe it should be institutionalized, a course of action that seemed particularly urgent when it appeared that Mitt Romney might win the presidency.


“There was concern that the levers might no longer be in our hands,” said one official, speaking on condition of anonymity. With a continuing debate about the proper limits of drone strikes, Mr. Obama did not want to leave an “amorphous” program to his successor, the official said. The effort, which would have been rushed to completion by January had Mr. Romney won, will now be finished at a more leisurely pace, the official said.


Mr. Obama himself, in little-noticed remarks, has acknowledged that the legal governance of drone strikes is still a work in progress.


“One of the things we’ve got to do is put a legal architecture in place, and we need Congressional help in order to do that, to make sure that not only am I reined in but any president’s reined in terms of some of the decisions that we’re making,” Mr. Obama told Jon Stewart in an appearance on “The Daily Show” on Oct. 18.


In an interview with Mark Bowden for a new book on the killing of Osama bin Laden, “The Finish,” Mr. Obama said that “creating a legal structure, processes, with oversight checks on how we use unmanned weapons, is going to be a challenge for me and my successors for some time to come.”


The president expressed wariness of the powerful temptation drones pose to policy makers. “There’s a remoteness to it that makes it tempting to think that somehow we can, without any mess on our hands, solve vexing security problems,” he said.


Despite public remarks by Mr. Obama and his aides on the legal basis for targeted killing, the program remains officially classified. In court, fighting lawsuits filed by the American Civil Liberties Union and The New York Times seeking secret legal opinions on targeted killings, the government has refused even to acknowledge the existence of the drone program in Pakistan.


But by many accounts, there has been a significant shift in the nature of the targets. In the early years, most strikes were aimed at ranking leaders of Al Qaeda thought to be plotting to attack the United States. That is the purpose Mr. Obama has emphasized, saying in a CNN interview in September that drones were used to prevent “an operational plot against the United States” and counter “terrorist networks that target the United States.”


But for at least two years in Pakistan, partly because of the C.I.A.’s success in decimating Al Qaeda’s top ranks, most strikes have been directed at militants whose main battle is with the Pakistani authorities or who fight with the Taliban against American troops in Afghanistan.


In Yemen, some strikes apparently launched by the United States killed militants who were preparing to attack Yemeni military forces. Some of those killed were wearing suicide vests, according to Yemeni news reports.


“Unless they were about to get on a flight to New York to conduct an attack, they were not an imminent threat to the United States,” said Micah Zenko, a fellow at the Council on Foreign Relations who is a critic of the strikes. “We don’t say that we’re the counterinsurgency air force of Pakistan, Yemen and Somalia, but we are.”


Then there is the matter of strikes against people whose identities are unknown. In an online video chat in January, Mr. Obama spoke of the strikes in Pakistan as “a targeted, focused effort at people who are on a list of active terrorists.” But for several years, first in Pakistan and later in Yemen, in addition to “personality strikes” against named terrorists, the C.I.A. and the military have carried out “signature strikes” against groups of suspected, unknown militants.


Originally that term was used to suggest the specific “signature” of a known high-level terrorist, such as his vehicle parked at a meeting place. But the word evolved to mean the “signature” of militants in general — for instance, young men toting arms in an area controlled by extremist groups. Such strikes have prompted the greatest conflict inside the Obama administration, with some officials questioning whether killing unidentified fighters is legally justified or worth the local backlash.


Many people inside and outside the government have argued for far greater candor about all of the strikes, saying excessive secrecy has prevented public debate in Congress or a full explanation of their rationale. Experts say the strikes are deeply unpopular both in Pakistan and Yemen, in part because of allegations of large numbers of civilian casualties, which American officials say are exaggerated.


Gregory D. Johnsen, author of “The Last Refuge: Yemen, Al Qaeda and America’s War in Arabia,” argues that the strike strategy is backfiring in Yemen. “In Yemen, Al Qaeda is actually expanding,” Mr. Johnsen said in a recent talk at the Brookings Institution, in part because of the backlash against the strikes.


Shuja Nawaz, a Pakistan-born analyst now at the Atlantic Council in Washington, said the United States should start making public a detailed account of the results of each strike, including any collateral deaths, in part to counter propaganda from jihadist groups. “This is a grand opportunity for the Obama administration to take the drones out of the shadows and to be open about their objectives,” he said.


But the administration appears to be a long way from embracing such openness. The draft rule book for drone strikes that has been passed among agencies over the last several months is so highly classified, officials said, that it is hand-carried from office to office rather than sent by e-mail.


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