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Ex-SAC trader Martoma seeks to toss insider trading conviction

NEW YORK (Reuters) – Former SAC Capital Advisors LP portfolio manager Mathew Martoma asked a U.S. judge to throw out his insider trading conviction, saying federal prosecutors did not prove he committed a crime and that improper evidence and jury bias tainted the verdict.

The request submitted late Thursday night in the U.S. District Court in Manhattan was expected. It followed Martoma’s February 6 conviction on two counts of securities fraud and one count of conspiracy.

“This court should enter a judgment of acquittal on all counts,” Martoma, 39, told U.S. District Judge Paul Gardephe, who presided over the roughly month-long trial, in the filing. In the alternative, Martoma said he deserves a new trial.

A spokeswoman for U.S. Attorney Preet Bharara in Manhattan did not immediately respond on Friday to a request for comment.

Martoma was accused of seeking and trading on confidential information about a clinical trial involving Ireland’s Elan Corp and Wyeth, now part of Pfizer Inc, over an experimental drug to treat Alzheimer’s disease.

Prosecutors said his trades enabled SAC, a hedge fund run by billionaire Steven A. Cohen, to generate profit and avoid losses of $275 million from trades in Elan and Wyeth before the trial’s results were announced in July 2008.

Martoma had worked in SAC’s CR Intrinsic Investors unit. Based on recent sentences in insider trading cases, he could face several years in prison when he is sentenced on June 10.

Eight people who once worked for SAC have been convicted of or pleaded guilty to insider trading. SAC no longer manages outside money, and now oversees Cohen’s $9 billion fortune. Cohen has not been criminally charged.


In his filing, Martoma argued that he had independent reasons to trade in Elan and Wyeth, including recommendations from SAC healthcare analysts that both stocks were overpriced, and that any tips he got were already public or immaterial.

He also said testimony from the octogenarian former University of Michigan medical professor Sidney Gilman, who testified to giving Martoma the clinical trial results, was unreliable because of his patchy memory.

Martoma also said the jury was biased because of widespread media attention during the trial to his 1999 expulsion from Harvard Law School for doctoring a transcript.

The verdict against Martoma came after a different jury in Manhattan convicted another SAC portfolio manager, Michael Steinberg, over another insider trading scheme.

SAC agreed last year to pay $1.8 billion and plead guilty to fraud stemming from employees’ insider trading. Its sentencing in the criminal case is set for March 14.

The U.S. Securities and Exchange Commission is seeking to bar Cohen from the financial services industry for failing to supervise Martoma and Steinberg.

The case is U.S. v. Martoma, U.S. District Court, Southern District of New York, No. 12-cr-00973.

(Reporting by Jonathan Stempel in New York; Additional reporting by Emily Flitter; Editing by Stephen Powell)

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Wall Street rises, S&P 500 at another record

NEW YORK (Reuters) – Stocks rose on Friday as some positive economic data boosted the SP 500 to record levels for a second straight day and put major indexes on track for strong gains in both the week and the month.

However, a discouraging read on economic growth pointed to an economy that continues to struggle, leaving some investors to question whether valuations are justified.

The Chicago Purchasing Managers Index rose to 59.8 in February, topping expectations, while the final February reading on consumer sentiment from the Thomson Reuters/University of Michigan Surveys of Consumers also rose more than expected.

The data bucked the trend of indicators coming in below forecasts, giving credence to the theory that the recent disappointments have come on harsh weather rather than weakening fundamentals. Stocks rose on Thursday, with the SP 500 closing at a record, after Federal Reserve Chair Janet Yellen indicated support for this theory.

Other reports released on Friday suggested an economy that struggles to gain traction. GDP was estimated to have grown at an annual rate of 2.4 percent in the quarter, the Commerce Department said. That was below estimates and down sharply both from its estimate last month of 3.2 percent and the 4.1 percent rate in the third quarter. Separately, pending home sales rose 0.1 percent in January, far below expectations for growth of 2 percent.

“The market has been giving a pass on these reports, which leaves me feeling a bit more vulnerable than I’d like, even though I do think this will end up being more about weather than weakness,” said Bill Stone, chief investment strategist at PNC Wealth Management in Philadelphia, which has $125 billion in assets under management.

“Right now valuations are in that middle range, not so high that they’re in a bubble or super expensive, but also not so low that they’re cheap. There’s not much in equities that really stands out as a beacon of opportunity.”

The Dow Jones industrial average .DJI was up 100.04 points, or 0.61 percent, at 16,372.69. The Standard Poor’s 500 Index .SPX was up 11.32 points, or 0.61 percent, at 1,865.61. The Nasdaq Composite Index .IXIC was up 19.09 points, or 0.44 percent, at 4,338.02.

For the month, the Dow is up 4.2 percent, the SP is up 4.5 percent and the Nasdaq is up 5.7 percent. For the week, the Dow is up 1.6 percent, the SP is up 1.5 percent and the Nasdaq is up 1.7 percent, on track for its fourth straight weekly rise.

Citigroup Inc (C.N) said it would lower its previously announced 2013 net income from $13.9 billion to $13.7 billion due to recently discovered fraud at a unit in Mexico. Shares rose 0.1 percent to $48.76. Inc (CRM.N) late Thursday raised its full-year revenue forecast and said it was looking to improve its adjusted operating margin. Shares fell 2 percent to $64.90.

Jos. A. Bank Clothiers Inc (JOSB.O) late Thursday rejected Men’s Wearhouse Inc’s (MW.N) revised takeover offer, calling it inadequate, though it was willing to talk about a higher bid. Shares of Jos. A. Bank rose 2.8 percent to $62 while Men’s Wearhouse was up 5.5 percent at $53.21.

In testimony before the Senate Banking Committee, Yellen said it would take a “significant change” to the economy’s prospects for the central bank to put plans to reduce its bond-buying program on hold. ID:L1N0LW1MJ

On Friday, Dallas Federal Reserve Bank President Richard Fisher said the central bank should halt its stimulus as soon as circumstances make it possible.

(Editing by Bernadette Baum and Nick Zieminski)

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Pending home sales edge up in January

WASHINGTON (Reuters) – Contracts to buy previously owned U.S. homes edged up in January after a weather-related hit at the end of last year, offering hope the housing recovery would get back on track.

The National Association of Realtors said its pending home sales index, based on contracts signed last month, rose 0.1 percent to 95.0 in January.

The increase followed a revised 5.8 percent December drop that had taken pending sales to their lowest level since November 2011.

“Ongoing disruptive weather patterns in much of the U.S. inhibited home shopping,” Lawrence Yun, chief economist for the Realtors, said in a statement. “Limited inventory also is playing a role, especially in the West, while credit remains tight and affordability isn’t as favorable as it was a year ago.”

(Reporting by Timothy Ahmann; Editing by Andrea Ricci)

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Consumer sentiment inches up in February

NEW YORK (Reuters) – Consumer sentiment rose marginally in February even as concerns about the extreme weather persisted, a survey released on Friday showed.

The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment for February came in at 81.6, slightly above the 81.2 in both the preliminary February number and the final January reading.

It was also slightly above the median forecast of 81.3 among economists polled by Reuters.

“The most significant implication is not whether consumers have correctly assessed the weather’s negative impact on the economy, but the resilience consumers have demonstrated in the face of the polar vortex as well as higher utility bills and minimal employment gains,” survey director Richard Curtin said in a statement.

The survey’s barometer of current economic conditions edged up to 95.4 from the 94.0 preliminary reading, which was also the median forecast. It was 96.8 in January.

The gauge of consumer expectations was 72.7, slightly lower than the initial February reading of 73 but up from January’s 71.2.

The survey’s one-year inflation expectation ticked down to 3.2 percent from 3.3 percent in the preliminary release, while the five-to-10-year inflation outlook was unchanged from the preliminary at 2.9 percent.

(Reporting by Rodrigo Campos; Editing by Chizu Nomiyama)

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EU-U.S. trade talks face growing hostility, ministers warn

ATHENS (Reuters) – Free-trade talks between the United States and the European Union are in danger of being derailed by populist groups opposing everything from globalization to multinationals, EU ministers and business leaders said on Friday.

The rise of anti-EU parties, reports of U.S. spying in Europe and accusations that a trade pact would pander to big companies have combined to erode public support for a deal that proponents say would dramatically increase economic growth.

“We are grappling with people who are anti-European, who are anti-American, who are anti-free trade, who are anti-globalization and who are anti-multinational corporations,” Finland’s minister for Europe and trade, Alexander Stubb, told his EU counterparts and business leaders at a meeting in Athens.

“We have an uphill battle to make the argument that this EU-U.S. free-trade agreement is a good one,” he said in remarks that were broadcast to reporters.

With the euro zone’s economy barely out of a two-year recession, EU governments see a trade deal with the United States as the best way to create jobs. They say a pact encompassing almost half the world’s economy could generate $100 billion in additional economic output a year on both sides of the Atlantic.

The European Union and the United States already trade almost $3 billion in goods and services each day, and by deepening economic ties, the pact could create a market of 800 million people where business could be done freely.

The EU’s trade chief Karel De Gucht conceded that, outside business circles, there was little public awareness about the proposed Transatlantic Trade and Investment Partnership, which is often known by its initials as “T-TIP”.

“When we talk about T-TIP, some people think it is an extraterrestrial,” De Gucht said.

Nils Andersen of Danish shipper A.P. Moller-Maersk, who was among chief executives invited to the debate, said there was a danger of voters being “hijacked by populist statements”.


Public support is crucial because the European Parliament and the U.S. Congress must ratify the agreement once it is made.

EU lawmakers have already shown a willingness to reject deals they think do not have enough public support – for example the global Anti-Counterfeiting Trade Agreement (ACTA) thrown out in 2012.

U.S.-EU trade talks initially enjoyed a warm reception when they were launched in July last year.

But European consumer and green groups said a deal letting firms operate freely in both the EU and the United states might let companies bypass EU safety and environmental standards.

The talks have also been overshadowed by widespread distrust of Washington caused by reports the United States bugged EU offices and German Chancellor Angela Merkel’s mobile phone.

In the United States, President Barack Obama’s efforts to speed up agreement on the deal, by renewing a ‘fast-track’ trade promotion authority, have faced resistance from members of his own Democratic party, some of them skeptical about the benefits of unfettered free trade.

The ‘fast track’ authority, which expired in 2007, would allow Obama to present the trade to Congress for a simple ‘yes/no’ vote, avoiding the risk of lawmakers picking it apart clause by clause and delaying its chances of becoming law indefinitely.

De Gucht said the EU’s tight regulation in the sensitive issue of genetically modified food would not change, even if Brussels and Washington did sign an accord.

Some Europeans are worried about what impact GM crops and products – often dubbed “Frankenstein Food” – might have on health and the environment.

“We are not dumbing down our standards,” De Gucht said. “I will not agree to put hormone beef on the European market or change our laws on genetically modified organisms.”

(Reporting by Robin Emmott; Editing by Andrew Heavens)

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China Eastern to buy 70 Airbus A320NEO for $6.4 billion

(Reuters) – China Eastern Airlines Corp Ltd (600115.SS) (0670.HK) has ordered 70 A320neo aircraft, marking a big victory for Airbus (AIR.PA), which has been actively marketing the upgraded variant of its popular A320 jet to Chinese carriers.

It is the first order by a Chinese airline for the plane. The European aircraft maker has been in discussion with Chinese carriers to sell hundreds of A320neos, company China president Eric Chen had told media last September.

The $6.37 billion deal will also help boost the competitiveness of the China Eastern, one of the country’s top three airlines, by increasing its capacity by about 13 percent, the carrier said in a stock exchange filing on Friday.

The aircraft are scheduled to be delivered from 2018 to 2020 and will be used to service short and medium routes, China Eastern said.

China Eastern also said it signed a separate deal with Airbus to sell back seven used A300-600 jets.

Airbus, which expects China to overtake the United States as the world’s largest domestic market by 2032, has invested heavily in the country. It manufactures the existing variants of the A320 at a factory in Tianjin.

(Reporting by Hong Kong and Singapore newsrooms; Editing by Matt Driskill)

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Top investors cut emerging Europe equities as Ukraine turmoil escalates: Reuters poll

LONDON (Reuters) – The world’s top investors cut exposure to emerging European equities to a five-month low in February as they fretted over a spillover from tensions in Ukraine and Russia, Reuters polls showed on Friday.

Concerns over China’s economic slowdown also prompted fund managers to trim their Asian equity holdings to a four-year low and instead boost euro zone equity weightings to the highest since June 2011.

The monthly polls covering 50 leading investment houses in the United States, Japan and Europe were taken between February 12 and 27, when three months of protests in Ukraine culminated in the overthrow of Moscow-backed Viktor Yanukovich, leaving an unstable political situation.

Central European assets have been under pressure as investors fear a possible default in Ukraine’s sovereign debt and the prospect of military conflict involving Russia.

However, overall equity holdings stood at 51.1 percent, holding near a one-year high, underscoring investor confidence in the U.S.-led global economic recovery.

“Despite the current emerging market weakness, an overall improving economic environment for 2014 should be supportive for risk assets in the next quarters,” said Boris Willems, strategist at UBS Global Asset Management.

“Nonetheless, investors should accept higher volatility, as negative news might weigh heavier on market sentiment.”

Emerging European equity holdings fell to 1.8 percent, after hitting a four-year high of 2.4 percent last month.

Emerging Asian equity holdings fell to 6.0 percent, the lowest since at least January 2010. In contrast, continental European weightings rose for a third month in a row to 18.9 percent, the highest since June 2011.

“The case for emerging market currencies and equities is not compelling yet as the momentum of growth expectations remains negative and tapering in the U.S. may continue to undermine carry trades,” said Chris Paine, director of asset allocation at Henderson Global Investors.

Fixed income holdings fell to 35.5 percent, levels not seen since April 2012. Within the asset class, North American allocation fell to 34.3 percent, the lowest since May 2010.


U.S. investors pushed their equity holdings to a four-month low of 56.2 percent of their model portfolios. The biggest declines came in the percentage of assets invested in Japanese stocks, which fell to 4.6 percent of assets. US/ASSET

Continental European investors cut their equity holdings in emerging Europe to 1.9 percent, their lowest since September 2012. The weighting of debt holdings in the region stood at 1.4 percent, rising for the first time in three months. EUR/ASSET

Japanese fund managers raised equity holdings to a 2 1/2-year high of 46.1 percent, favoring U.S. shares. They cut their bond allocations to 46.8 percent, the lowest since October 2011. JP/ASSET

British investors slashed their bond holdings to 22.8 percent from 24.2 percent in January, their lowest level since at least May 2012. Allocation to emerging European equities halved to 1 percent. GB/ASSET

(Additional reporting by Jemima Kelly and Joshua Franklin in London, Rahul Karunakar in Bangalore, David Randall in New York and Hideyuki Sano in Tokyo; Editing by Susan Fenton)

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Mt. Gox files for bankruptcy, blames hackers for losses

TOKYO (Reuters) – Mt. Gox, once the world’s biggest bitcoin exchange, filed for bankruptcy protection in Japan on Friday, saying it may have lost nearly half a billion dollars worth of the virtual coins due to hacking into its faulty computer system.

The collapse caps a tumultuous few weeks in which the company has remained virtually silent after halting trades of the crypto-currency, shaking the nascent but burgeoning bitcoin community.

Wearing a suit instead of his customary T-shirt, Mt. Gox’s French CEO Mark Karpeles bowed in contrition and apologized in Japanese at a news conference at the Tokyo District Court, blaming his firm’s collapse on a “weakness in our system”, but predicting that bitcoin would continue to grow.

“First of all, I’m very sorry,” he said. “The bitcoin industry is healthy and it is growing. It will continue, and reducing the impact is the most important point.”

Angry investors have been seeking answers for what happened to their holdings of cash and bitcoins on the unregulated Tokyo-based exchange.

Mt. Gox said the exchange, used overwhelmingly by foreigners, had lost 750,000 of its users’ bitcoins and 100,000 of its own. At the current bitcoin price of about $565, that would total some $480 million – representing about 7 percent of the estimated global total of bitcoins.

It also said there was a discrepancy of 2.8 billion yen ($27.4 million) in its bank accounts when it checked on Monday. Junko Suetomi, a lawyer with Baker MacKenzie, said she could not comment on the balances of foreign bank accounts held by the company.


Many bitcoin market participants have said Mt. Gox’s problems were specific to the company and were caused by what they said was a lax attitude by Karpeles, while bitcoin itself – free of any central bank control – was still a noble venture.

“If we could agree on legal regulation, we should let (bitcoin and regulators) co-exist,” said Keiichi Hida, a bitcoin investor and member of the Japan Digital Money Association. He lost about 100,000 yen worth of bitcoins, but seemed unconcerned as he became interested in the virtual currency as a form of “study”.

“We should make it a national project to have bitcoin used nationwide at the time of the 2020 Tokyo Olympics,” he said.

Mt. Gox deleted its website on Tuesday after freezing withdrawals earlier this month in the wake of a series of technical difficulties.

The exchange had liabilities of 6.5 billion yen ($63.67 million), dwarfing its total assets of 3.84 billion yen, the company said. It had 127,000 creditors in bankruptcy, just over 1,000 of whom are Japanese.

The company and Karpeles have said little in the days before Friday’s court filing, which is similar to Chapter 11 bankruptcy in the United States, except that they were working with others to resolve their problems.

Another lawyer, Akio Shinomiya at Yodoyabashi and Yamagami, said Mt. Gox wanted to file a criminal complaint against what he said was a hacking attack, but had no specific means of doing so.

“Bitcoin has always been volatile and speculative, said bitcoin user Ken Shishido, who had about a tenth of his bitcoin holdings at Mt. Gox, but has seen the rest of his bitcoins soar tenfold since he began trading 18 months ago.

“It’s too bad that this happened, but we have to let it go. And then we’ll buy more.”

($1 = 102.0850 Japanese yen)

(Additional reporting by Nathan Layne and Emi Emoto; Writing by William Mallard; Editing by Ian Geoghegan)

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New Gold feels the pain

Canada’s New Gold Inc plunged into the red last year after taking a hit on its Cerro San Pedro gold mine in Mexico, racking up a net loss of US$191 million.

The company said: “The [US$206 million] impairment charge at Cerro San Pedro, which accounted for the vast majority of the total charge, primarily related to bringing down the value ascribed to [its] mineral reserves and resources as part of the purchase accounting at the time of the company’s three-way merger in 2008.”

Revenue was knocked by the decrease in the average realised price of gold, copper and silver. In 2013, the average gold price decreased by 14%, the copper price by 9% and the silver price by 25%, when compared to 2012.

For the full year, New Gold’s revenue generation remained similar to 2012 despite lower commodity prices as the price impact was offset by increased copper sales volumes due to a full year of production from the New Afton.

Chairman Randall Oliphant inferred that the damage to the profit and loss account would have been greater had not the company delivered the lowest annual total cash costs in its history. Total cash costs of US$377/oz and all-in-sustaining costs of US$899/oz.

Oliphant added: “We now look forward to 2014 where we have targeted a further decrease in costs, from what was already a record low for our company, which will drive continued cash flow generation.

“Currently, we feel particularly well positioned as the start of the year has seen the appreciation of the gold price coupled with the continued depreciation of the Canadian dollar which significantly benefit the value of both our New Afton Mine and our Canadian-based development projects.”

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