DealBook: Criminal Indictment Is Expected for SAC Capital Advisors

Federal authorities are poised to level a criminal indictment against SAC Capital Advisors, the hedge fund run by the billionaire Steven A. Cohen, capping a nearly decade-long insider trading investigation into one of Wall Street's most prominent firms.

Prosecutors and the F.B.I. in Manhattan are expected to announce the charges in the coming days, according to people briefed on the matter, who spoke only on the condition of anonymity. The move, a rare aggressive action against a big company, could cripple SAC.

It is unclear whether SAC's lawyers will try to settle at the last minute, though that is an unlikely option at this point. Mr. Cohen is not expected to be charged criminally, though authorities are still contemplating bringing charges against other employees at SAC.

While the legal deadline for filing some insider trading charges may have already passed, authorities are planning to navigate around that requirement by filing a broader criminal conspiracy case against SAC, these people said. As long as one of the trades cited in the case took place in the last five years — and some did — then the government has the power to sweep in older trades to highlight a continuing scheme.

Representatives for the government and SAC declined to comment.

The indictment would come on the heels of the the Securities and Exchange Commission's filing a civil action last week. It accused Mr. Cohen of failing to supervise employees suspected of insider trading. Those employees, Mathew Martoma and Michael S. Steinberg, had been charged with criminal wrongdoing.

In its order, the S.E.C. cited a 2008 e-mail forwarded to Mr. Cohen in which an SAC analyst explicitly stated that he had a "2nd hand read from someone at" the computer maker Dell, a source who provided financial information about the company before its earnings announcement. Minutes after receiving the e-mail, Mr. Cohen sold his entire position in Dell, the S.E.C. said.

In a 46-page document responding to the S.E.C.'s charges, Mr. Cohen's lawyers said there was an innocent explanation for his not reacting to the suspicious e-mail: he did not read it.

"Cohen has no memory of having seen it and no witness will testify that they discussed it with him," the lawyers said in the document, circulated internally at SAC and reviewed by The New York Times and referred to earlier in The Wall Street Journal.

Mr. Cohen, the lawyers argued, received an average of 1,000 e-mails each day in 2008. At the time, he apparently opened only 11 percent of the e-mails, though the lawyers did not disclose how they arrived at that figure.

To locate an incoming message, Mr. Cohen would have to look at the only one of his seven computer screens that displays e-mail, a monitor that happened to be "to the far left" of the others, his lawyers argued. Then he would have to "minimize one or two computer programs" to call up his Microsoft Outlook window, which was "reduced" so that Mr. Cohen could see, at most, only five messages at once.

While the document makes a strong case that Mr. Cohen was not knowingly trading on inside information, it is unclear whether it will rebut the S.E.C.'s claims that he did not prevent employees from doing so. The S.E.C. must show that Mr. Cohen did not "reasonably" supervise them.

Mr. Martoma, 39, and Mr. Steinberg, 40, have each pleaded not guilty to criminal insider trading charges and face separate trials in November.

Mr. Cohen's civil case will play out before an administrative law judge at the S.E.C. rather than in a federal court. On Tuesday, Chief Judge Brenda P. Murray was assigned to the case, and a hearing was scheduled for Aug. 26.

The SAC document, people briefed on the matter said, was adapted from the lawyers' response to the S.E.C.'s so-called Wells notice that warned of potential charges. It also outlined the arguments that SAC most likely presented in an effort to persuade the Justice Department not to bring a criminal indictment of the fund.

A criminal charge against SAC would likely serve as a death blow to the firm. SAC has already been hobbled by the government's investigation, with investors in the fund pulling about $5 billion from the fund since the beginning of the year. But an indictment may pressure more investors to pull their money. It could also force SAC's trading partners, which include nearly all of the largest Wall Street banks, like Goldman Sachs and Morgan Stanley, to suspend business with the firm.

Criminal charges against companies are extremely rare, and the government is reluctant to bring them given the potential collateral consequences. After the Justice Department indicted Enron's accounting firm, Arthur Andersen, the firm was forced to close and 28,000 jobs were lost. SAC, which is based in Stamford, Conn., has about 1,000 employees.

Before bringing indictments against companies, federal prosecutors consider a number of factors when deciding to bring a case, including the pervasiveness of wrongdoing and the company's level of cooperation in the investigation.

The Dell e-mails are expected to play a central role in the criminal case.

Even if he was a vigilant e-mail consumer, the lawyers say, Mr. Cohen could argue that the 2008 dispatch did not identify the source of the information about Dell, suggesting that it could have "lawfully" come from an authorized person at the company. The source, the lawyers note, did in fact turn out to be someone from the investor relations department, who has not been accused of any wrongdoing. The lawyers also note that the information in the e-mail "turned out to be wrong."

Still, SAC made profits and avoided losses of $1.7 million. And once Dell released its earnings, Mr. Cohen sent an e-mail to Mr. Steinberg that said, "Nice job on Dell."

Mr. Cohen sold his stake in Dell, the lawyers argue, with "good reason." Mr. Cohen, they said, took the position based on the recommendation of a portfolio manager at SAC, whom people briefed on the matter identified as Gabe Plotkin. Minutes after Mr. Plotkin started selling, so did Mr. Cohen.

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N.S.A. Director Lobbies House on Eve of Critical Vote

WASHINGTON — The Obama administration scrambled on Tuesday to slow Congressional opposition to the National Security Agency's domestic spying operations as the House of Representatives prepared to vote on legislation that would block the agency's collection of records about every phone call dialed or received inside the United States.

Doug Kapustin/Reuters

Gen. Keith B. Alexander, the N.S.A. director, held classified meetings with House members on Tuesday.

Jacquelyn Martin/Associated Press

Senator Ron Wyden, a critic of some National Security Agency's programs, spoke out about expansive surveillance Tuesday.

Gen. Keith B. Alexander, the N.S.A. director, met with Democrats and Republicans to lobby against a proposed amendment to a military appropriations bill that would stop the financing for its phone data collection program. The Republican-sponsored legislation is one of the first Congressional efforts to curb the agency's domestic spying efforts since they were leaked by Edward J. Snowden, a former N.S.A. contractor.

Later on Tuesday, the White House issued a statement praising the idea of a debate about surveillance but denouncing "the current effort in the House to hastily dismantle" the call tracking program, urging lawmakers to vote down the legislation and instead conduct a "reasoned review of what tools can best secure the nation."

"This blunt approach is not the product of an informed, open, or deliberative process," the White House statement said.

General Alexander's hurried visit to Capitol Hill came as a leading Senate critic of the N.S.A.'s large-scale collection of data about Americans' phone calls spoke out about expansive government surveillance. He declared that recent leaks about domestic spying by Mr. Snowden have created a "unique moment in our constitutional history" to reform what he said has become "an always expanding, omnipresent surveillance state."

Ron Wyden, Democrat of Oregon, the leading Senate critic and a member of the Intelligence Committee, also hinted that the revelation that the government has been keeping records of every domestic phone call is not the only such extensive program. And he blasted national security officials in the Obama administration, saying they have "actively" misled the American public about domestic surveillance.

"As we have seen in recent days, the intelligence leadership is determined to hold on to this authority," Mr. Wyden said. "Merging the ability to conduct surveillance that reveals every aspect of a person's life with the ability to conjure up the legal authority to execute that surveillance, and finally, removing any accountable judicial oversight, creates the opportunity for unprecedented influence over our system of government."

Mr. Wyden spoke at the Center for American Progress, a liberal research group. He had been among a handful of senators warning — years before Mr. Snowden's leaks — that the government was secretly interpreting its powers under the Patriot Act in an alarming way.

Among other things, he suggested that the bulk collection of all domestic phone records is not the only such effort, saying Mr. Snowden's disclosures meant the public was finally able to see "some" of what Mr. Wyden has been raising alarms about, and that the same legal theory has been deemed to authorize "secret surveillance programs" — plural — "that I and colleagues think go far beyond the intent of the statute."

He did not explain what else was based on that legal interpretation, but complained that his hands were tied by classification rules. The Obama administration conducted an e-mail data collection program on the same scale as the phone program, but officials said it was ended in 2011.

Mr. Wyden said that the government's theory of its power under the Patriot Act to collect records about people from third parties is "essentially limitless," saying it could use that authority to gather in bulk medical, financial, credit card and gun-ownership records or lists of "readers of books and magazines deemed subversive." He also dwelled on the potential for cellphones to serve as secret monitoring devices, saying everyone is carrying a "combination phone bug, listening device, location tracker and hidden camera."

His speech helped frame the debate over the vote scheduled for Wednesday on an amendment to the House defense appropriations bill, sponsored by Representative Justin Amash, Republican of Michigan, that would block the N.S.A. phone records program.

Senator Dianne Feinstein, Democrat of California, the chairwoman of the Senate Intelligence Committee, and Senator Saxby Chambliss, Republican of Georgia, the ranking minority member of the panel, issued a joint statement opposing the House legislation.

Mr. Amash said in an interview that he did not believe that General Alexander's meeting changed any minds among House members and added that he believed his legislation had a good chance of winning approval.

"I think the American people are overwhelmingly in support of reining in the blanket surveillance of the N.S.A.," Mr. Amash said.

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Legal Battle Lifts Profile of a Quiet Empire

Nathan Weber for The New York Times

111 East Wacker Drive in Chicago, one of the properties that are part of CommonWealth REIT, a $25 billion real estate empire based outside Boston.

It is a quiet American fortune, a $25 billion empire stretching from Boston to Honolulu that is rarely noticed outside tight business circles.

But now the private world of Barry Portnoy, the anti-Trump of American real estate, is being dragged into an uncomfortable spotlight in a drawn-out legal battle for part of his empire.

Mr. Portnoy, 67, oversees a wildly lucrative business from unassuming offices in Newton, Mass., west of downtown Boston. In an industry known for big money and bigger egos, he cuts a decidedly unglamorous figure. Mr. Portnoy runs his empire on a shoestring and, by most accounts, is far more interested in making money than spending it. For a time, he commuted to work in a Subaru, according to several former employees, and he keeps a low profile even at events like the annual company clambake in the parking lot.

His son and business partner, Adam Portnoy, lives a bit larger. Adam Portnoy's wife, Elika, was a runner-up in a Miss Bulgaria beauty contest. Said to be an expert marksman, she played a belly dancer in the 2012 Christian Slater thriller "Assassin's Bullet." Adam Portnoy owns a 43-foot yacht called the Mutressa, a Bulgarian term that loosely translates as "gangster's mistress." The couple met while working at the World Bank.

What unites father and son, the former employees say, is an abiding love for a hard-nosed deal. In their Newton offices hangs a painting of Wild West bank robbers wearing ill-fitting business suits. It is titled "The Fort Worth Five a k a The Board of Directors."

For years, some investors have grumbled that the Portnoys have enriched themselves at investors' expense, a claim the Portnoys have dismissed as nonsense.

But now some serious financial players are vying for a multibillion-dollar piece of their kingdom, in a legal battle over an obscure real estate investment trust called CommonWealth REIT. On one side are the Portnoys, who have long blurred the lines between their public companies and their private fiefs. On the other is a cohort of New York money men, among them a protégé of Carl C. Icahn, the quintessential Wall Street gadfly, and associates of Stephen Ross, the Manhattan real estate magnate. Both sides are hurling an accusation often heard when money collides with money: each accuses the other of baldface greed.

Whatever the outcome, the imbroglio has trained attention on a web of trusts and partnerships that the Portnoys have long used to pull many millions from CommonWealth and other public entities that own city towers and suburban office complexes across the nation. Last year, their private management company collected nearly $200 million in various fees and expenses from those businesses. The Portnoy camp says that the dissidents are essentially trying to steal CommonWealth and that courts have repeatedly sided with the Portnoys. In late June, the Portnoys and the rest of the board were voted out, but the Portnoys contend that the vote was invalid and was swayed by their opponents' hedge fund friends. Starting this week, the dispute will go before an industry arbitration panel.

A crucial issue is the Portnoys' management arrangement with the funds they oversee. Essentially, they make money through numerous fees they charge no matter how CommonWealth's share price performs in the stock market, leading one research firm, Green Street Advisors, to brand the Portnoy funds "uninvestible."

Over the last decade, CommonWealth has returned about 45 percent. That performance might sounds great, but it lagged the broad stock market and an index of other real estate investment trusts during that period. Real estate investment trusts, a popular investment strategy, pay no corporate income tax as long as they distribute 90 percent of their profits as dividends to investors.

Adam Portnoy, 43, staunchly defends the Portnoy way. He says the family has rewarded investors over the years and points out that CommonWealth found ready buyers for new shares that it sold this spring.

"If we hadn't, how would we be able to raise money so readily?" Mr. Portnoy said in a telephone interview. "Why are shareholders investing in our companies?"

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Manufacturing in China Contracts Further

HONG KONG — China's manufacturing sector contracted in July at the quickest pace since last summer, according to the early reading of a survey released on Wednesday.

The survey came in at an 11-month low of 47.7 points for July, down from the final June figure of 48.2. A result below the 50-point level signals contraction.

The monthly survey of purchasing managers in the manufacturing sector, compiled by the research firm Markit and released by the British bank HSBC, offers one of the earliest glimpses at how the economy is doing each month and is closely watched by economists and investors. Final figures for July, based on more complete survey results, are scheduled to be released next week, alongside the results of an official manufacturing survey to be published the National Bureau of Statistics.

The so-called flash P.M.I. data provided the latest sign of the pressures faced by China as a whole as the authorities in Beijing try to raise productivity, living standards and domestic demand while shifting the economy away from its reliance on exports and investment.

The new P.M.I. data "suggests a continuous slowdown in manufacturing sectors thanks to weaker new orders and faster destocking," Qu Hongbin, the chief China economist at HSBC, ? said Wednesday in a statement accompanying the survey results. The July figure puts pressure on the labor market and "reinforces the need to introduce additional fine-tuning measures to stabilize growth."

The efforts by President Xi Jinping ? and Prime Minister Li Keqiang, ?who took office in March, to rebalance the economy involve a delicate attempt to rein in the inefficient investments and surging lending of the past few years — but to do so without snuffing out the growth that is needed to create jobs, and maintain social and financial stability.

Analysts generally agree that the newfound emphasis on the quality, rather than the sheer speed, of growth is encouraging because it could bring about some of the changes that are needed to put China's once supercharged economy on the path toward a more sustainable pace of expansion in the long term.

But this process also entails the risk that growth could slow down more sharply than intended, some economists warn.

Data released on July 15 showed that China's gross domestic product grew 7.5 percent in the second quarter of this year, compared with the same period a year earlier. That was a notable slowdown from previous quarters, showing that China's economy continues to cool and indicating that Beijing may struggle to meet its official growth target of 7.5 percent for the full year if the deterioration continues.

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Well: Black-White Divide Persists in Breast Cancer

Breast cancer survival is, over all, three years shorter for black women compared with white women, mostly because their cancer is often more advanced when they first seek medical care, new research shows.

While cancer researchers have known for two decades that black women with breast cancer tend to fare worse than white women, questions remain about the reasons behind the black-white divide. The new report, from researchers at the University of Pennsylvania, begins to untangle some of the issues by using an analytic method to filter the influence of demographics, treatment differences and variations in tumor characteristics, among other things.

The findings, published in The Journal of the American Medical Association, suggest that while a significant number of black women still get inferior cancer care, the larger problem appears to be that black women get less health care over all, and that screening and early detection campaigns may have failed to reach black communities.

Using data from Medicare patients tracked in the Surveillance, Epidemiology and End Results database, the researchers analyzed 107,273 breast cancer cases, which included 7,375 black women. The larger number of cases involving white women allowed researchers to find nearly perfectly matched controls against which to compare the outcomes of black women with breast cancer.

The findings were striking. Over all, white women with breast cancer lived three years longer than black women. Of the women studied, nearly 70 percent of white women lived at least five years after diagnosis, while 56 percent of black women were still alive five years later.

The difference is not explained by more aggressive cancers among black women. Instead, the researchers found a troubling pattern in which black women were less likely to receive a diagnosis when their cancer was at an early stage and most curable. In addition, a significant number of black women also receive lower-quality cancer care after diagnosis, although those differences do not explain the survival gap.

"Something is going wrong," said Dr. Jeffrey H. Silber, a professor at the University of Pennsylvania and the director of the Center for Outcomes Research at the Children's Hospital of Philadelphia, which studies disparities in health care. "These are huge differences. We are getting there too late. That's why we are seeing these differences in survival."

The data show that black patients are twice as likely to never receive treatment. The records of 12.6 percent of black patients did not show evidence of treatment, compared with 5.9 percent of whites.

Black patients were also more likely to have at least a three-month delay in receiving treatment. Among black and white women with similar tumors, 5.8 percent of black women had not started treatment after three months, compared with just 2.5 percent of whites.

One notable finding of the report is that while the introduction of new treatments has improved the outcome for both white and black breast cancer patients since 1991, those improvements have not narrowed the survival gap between the two groups.

But solving disparities in cancer care would not immediately have a major effect on overall survival for black women, the study showed. If black women began receiving exactly the same quality and level of breast cancer treatment as white women, that would lengthen their lives by two to three months, the study showed.

However, two additional years of life could be gained among black women if their breast cancers were detected earlier and if their health were better over all, as is the case with white women with breast cancer. Among the black women studied, 20 percent received a diagnosis of Stage III or IV disease, when the cancer is far less likely to be cured. Among the white women, only 11.4 percent had late-stage disease.

One reason may be that the black women studied were less likely to seek medical care for any reason.

Although all the patients in the analysis had Medicare coverage, blacks were significantly less likely than white women to have seen a primary care doctor in the 6 to 18 months before diagnosis, and they had far lower rates of cholesterol and colon cancer screening. Black women also had far lower rates of breast cancer screening — 23.5 percent had been screened 6 to 18 months before diagnosis, compared with 35.7 percent of white women. Black women with breast cancer were, over all, in poorer health than white women. Of the black women studied, 26 percent had diabetes, compared with 12.6 percent of white women.

"These patients have insurance," Dr. Silber said. "We need to improve screening for these women and improve their relationships with a primary care provider."

In an accompanying editorial, the authors, who included Dr. Jeanne S. Mandelblatt of the Cancer Prevention and Control Program at Georgetown University's Lombardi Cancer Center, said the rigorous study offered "additional clues to the black-white differences in breast cancer outcomes."

However, the authors wrote that the report may still understate the effect of lower-quality cancer care for black women, in part because some treatment data are missing from the database it used.

"Ratings of patient-physician communication and trust have been related to black women's, but not white women's, patterns of chemotherapy use," the authors wrote. These findings further reinforce "the idea that black women may have different cancer care experiences than white women."

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Europe’s Carrot-and-Stick Approach to Israel Includes Blacklisting Hezbollah

BRUSSELS — At the end of a week when the European Union slapped Israel with financing restrictions to push it to resolve its conflict with the Palestinians, major European powers on Friday stepped up pressure to give Israel one of its long-sought demands: designating the Lebanese militant group Hezbollah as a terrorist organization.

The timing of the carrot-and-stick actions was coincidental, but they illustrated the bloc's strategy of pushing forward with its own efforts to rein in Israeli actions that undermine the Middle East peace process — and to maintain good relations with Israel, understanding its unique security needs.

The approach has leading member states like Britain and France making a renewed effort to navigate deep divisions within the Union over the Middle East peace process, in which the United States' role has long eclipsed that of the Union.

It may continue to do so. Analysts said the moves by Europe were unlikely to be a game changer in the region, a conclusion seemingly underlined on Friday when Secretary of State John Kerry announced possible Israeli-Palestinian talks in Washington as early as next week.

On Friday, the Union went ahead with publishing new guidelines banning the financing of, or cooperation with, institutions in territories seized by Israel in the 1967 war, despite an intense Israeli effort to stop them, including phone calls by Prime Minister Benjamin Netanyahu to a half-dozen European heads of state and consultations with envoys from the British, French and German missions in Israel.

"We can't accept the guidelines as they are now," said a senior Israeli official who described himself and other officials as being engaged in "the European war" this week over the guidelines "They are imposing things we cannot accept."

At the same time, Britain is leading the effort to impose sanctions against Hezbollah after a terrorist attack in Bulgaria a year ago that killed five Israeli tourists and their Bulgarian driver, and the conviction in March of a Hezbollah operative in Cyprus for plotting a similar attack.

"There are still some reservations," a senior Union official said on condition of anonymity because private talks between the bloc's governments were continuing. But "we are moving in the end towards what could be a listing of the military movement."

A decision to put Hezbollah on the terrorist list will require the unanimous consent of the bloc's 28 members at a meeting of foreign ministers here on Monday.

If such an agreement is reached, the sanctions would eventually consist of travel bans and asset freezes, Union officials said, adding that more time would be needed to come up with precise terms.

Israel and the United States, which already brand Hezbollah as a terrorist organization, are pressing hard for the Union's member states to follow suit.

The Union is Israel's largest trading partner, covering $40 billion annually — one-third Israeli exports and two-thirds European. But the political relationship is much more complicated, shrouded by memory of the Holocaust and continuing concern over anti-Semitism in many countries.

A number of European countries like Ireland and Austria, which has peacekeepers in the Golan Heights, are wary of destabilizing Lebanon by cracking down on militant elements like Hezbollah, and of eroding their own influence on events there.

The publication of the Union guidelines met with particular fury among Israelis like Finance Minister Yair Lapid, the leader of a party whose largely wealthy, secular constituency is particularly concerned about the prospect of isolation from Europe.

Mr. Lapid said in an interview on Israeli television Friday night that the new guidelines were not "just hypocrisy" but "stupidity," adding, "If they care about peace, they're damaging it."

Mr. Lapid said militant Palestinian groups were pressuring President Mahmoud Abbas of the Palestinian Authority to refrain from negotiations with Israel by "saying to him, 'Wait, wait, Israel is being isolated. That isolation is mounting.' "

The European Union, he said, "has gone on to serve those most radical forces in Palestinian society."

James Kanter reported from Brussels, and Jodi Rudoren from Jerusalem. Steven Erlanger contributed reporting from Paris, and Michael R. Gordon from Amman, Jordan.

12.07 | 0 komentar | Read More

President Offers a Personal Take on Race in U.S.

Doug Mills/The New York Times

Obama Speaks on the Zimmerman Verdict: In surprise remarks at the White House, President Obama said, "Trayvon Martin could have been me 35 years ago."

WASHINGTON — After days of angry protests and mounting public pressure, President Obama summoned five of his closest advisers to the Oval Office on Thursday evening. It was time, he told them, for him to speak to the nation about the Trayvon Martin verdict, and he had a pretty good idea what he wanted to say.

For the next 15 minutes, according to a senior aide, Mr. Obama spoke without interruption, laying out his message of why the not-guilty ruling had caused such pain among African-Americans, particularly young black men accustomed to arousing the kind of suspicion that led to the shooting death of Mr. Martin in a gated Florida neighborhood.

On Friday, reading an unusually personal, handwritten statement, Mr. Obama summed up his views with a single line: "Trayvon Martin could have been me 35 years ago."

That moment punctuated a turbulent week marked by dozens of phone calls to the White House from black leaders, angry protests that lit up the Internet and streets from Baltimore to Los Angeles, and anguished soul-searching by Mr. Obama. Aides say the president closely monitored the public reaction and talked repeatedly about the case with friends and family.

Several people who have had conversations with Mr. Obama's top aides said a president who has rarely spoken about America's racial tensions from the White House was particularly torn about appearing to force the hand of Eric H. Holder Jr., the attorney general, when it comes to any investigations in the case.

The White House's original plan — for Mr. Obama to address the verdict in brief interviews on Tuesday with four Spanish-language television networks — was foiled when none of them asked about it.

Instead, he appeared in the White House briefing room with no advance warning and little of the orchestration that usually accompanies presidential speeches. Mr. Obama spoke for 18 minutes, offering his own reflections and implicitly criticizing gun laws and racial profiling methods — both of which, critics say, played a role in Mr. Martin's death.

Mr. Obama continued to avoid criticizing either the conduct of the trial or the verdict, in which a jury found a neighborhood watch volunteer in Sanford, Fla., George Zimmerman, not guilty of all charges in the killing of Mr. Martin in February 2012.

But in the most expansive remarks he has made about race since becoming president, Mr. Obama offered three examples of the humiliations borne by young black men in America: being followed while shopping in a department store, hearing the click of car doors locking as they cross a street, or watching as women clutch their purses nervously when they step onto an elevator. The first two experiences, he said, had happened to him.

"Those sets of experiences inform how the African-American community interprets what happened one night in Florida," Mr. Obama said. "And it's inescapable for people to bring those experiences to bear."

For black leaders who had beseeched the president to speak out — inundating White House officials with phone calls — his remarks were greeted with a mixture of relief and satisfaction.

The Rev. Jesse Jackson said Mr. Obama had no choice but to confront mounting concern among African-Americans about the Martin case and recent Supreme Court rulings on affirmative action and voting rights.

"At some point, the volcano erupts," Mr. Jackson said.

From the moment the verdict was announced on Saturday night, black activists had called on Mr. Obama to express the anger and frustration of their community. The pressure only increased after he issued a carefully worded statement urging respect for the jury's decision.

"We needed this president to use his bully pulpit," said the Rev. Al Sharpton, the civil rights activist and host on MSNBC, who urged Mr. Obama's advisers to have him speak out.

The parents of Mr. Martin, Sybrina Fulton and Tracy Martin, said they were "deeply honored and moved" by Mr. Obama's comments. "President Obama sees himself in Trayvon and identifies with him," they said in a statement on Friday. "This is a beautiful tribute to our boy." 

Jodi Kantor contributed reporting from Truro, Mass.

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Without Bloomberg in Charge, Police Commissioner’s Future Is Unclear

He is 71 years old and has missed most of the campaign deadlines to run for public office, leaving his own mayoral hopes unrealized. So the question hanging over Raymond W. Kelly, the commissioner, is this: What comes next for the man whose run as leader of the New York Police Department has made him a nationally recognized figure?

Guessing Mr. Kelly's next move has never been easy. But for a man who keeps his own counsel and rarely seems unsure of himself, he seems somewhat ambivalent about what might lie ahead.

Mr. Kelly's wife, Veronica, is said to be eagerly awaiting her husband's departure from the long hours and endless demands of the commissioner's job, which Mr. Kelly has held under Mayor Michael R. Bloomberg since 2002.

But he appears conflicted about the prospect of leaving public life. That became clear this month when he was promoted as a possible candidate to be the next secretary of homeland security.

Representative Peter T. King, a Long Island Republican and member of the House Homeland Security Committee, said that after he spoke publicly in favor of Mr. Kelly's candidacy, he received a thank-you call from Mr. Kelly. Mr. King said he had expected Mr. Kelly to tell him that he was not interested in the job. That did not happen.

"He asked me to keep him apprised of what's happening," Mr. King said. It was one of the few times that Mr. Kelly had not dismissed another post, he added.

"To me," the representative said, "it said a lot that he didn't say knock it off, or it's not something I'm interested in."

The homeland security job is not the only candidacy that Mr. Kelly has sought to keep open. For years, he has been mentioned as a likely candidate for mayor, and he never tried too hard to stamp out the rumors.

But as the speculation about a mayoral bid finally began subsiding within the last year, Mr. Kelly continued to toy with the idea privately.

At lunch with a Republican campaign strategist, he came prepared to discuss particulars. "He pulled out a little notebook and had 50 questions he wanted me to answer," the consultant, Ed Rollins, recalled about the meeting that took place in the last year. "What type of chance I thought he had? Is it too late? Can he raise the money?"

Mr. Kelly's willingness to entertain the notion of a bid for mayor persisted well into June, as the state chairman of the Republican Party, Edward F. Cox, sought to draw him into the race.

Earlier this month, at a party in Southampton, Mr. Kelly managed to leave some partygoers with the impression that he had not entirely ruled out a mayoral bid, according to a person who attended the party.

Mr. Kelly has served as police commissioner longer than anyone else, leading the agency as the city confronted terrorism threats and drove violent crime down.

There is little evidence to suggest Mr. Kelly is slowing down under the demands of the job. News conferences and City Council hearings appear to leave him rejuvenated and energized, rather than tired.

In New York City, it has been a tradition for mayors to pick their own commissioners. Even if he were asked to stay on by Mr. Bloomberg's successor, it is not clear that he would want to; the next mayor is likely to seek more control over the Police Department, rather than give Mr. Kelly the autonomy that Mr. Bloomberg did.

It is not clear how likely a candidate Mr. Kelly is for the homeland security post.

President Obama wondered aloud about Mr. Kelly's current job satisfaction. "Mr. Kelly might be very happy where he is," the president said recently in a television interview. "But if he's not, I'd want to know about it," Mr. Obama said, adding that Mr. Kelly would be "very well qualified" for the job.

But praising Mr. Kelly does not mean that he is prepared to nominate him. Indeed, the Police Department's stop-and-frisk tactics as well as its aggressive surveillance practices in Muslim communities could raise concerns within Mr. Obama's own party.

Officials in the Obama administration played down the president's comment this week and said no decision was imminent.

Still, Mr. Kelly would not have trouble finding new work.

"Ray Kelly has the luxury of knowing he can go out and make a million dollars for himself at any time and he would be highly sought out from the private sector," Representative King said, "and that would be for a job with a lot less work."

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Going, in Uncertainty, Where No Other Big City Has

Michael F. McElroy for The New York Times

A day after Detroit filed for bankruptcy, anxious residents wrestled with how the move might change their lives. More Photos »

DETROIT — This city awoke on Friday in bankruptcy proceedings, a place no American city of its size has ever been, and reminders of the uncharted, uncertain nature of the circumstance were all around.

Well into the workday, the morning after a state-appointed emergency manager filed for Chapter 9 bankruptcy protection for the city, a woman paused outside the Detroit municipal building, inquiring whether the place was closed. The receptionist at the mayor's office (which, like the rest of city offices, was open as usual) said she had received a few calls from similarly puzzled residents, not to mention a caller from Texas who said he wanted to make an offer to buy the city. And one resident on the East Side, told of the city's bankruptcy filing in federal court, wondered aloud whether she now ought to move away.

"Mostly what we're getting are questions," said Saunteel Jenkins, the president of Detroit's City Council. "City employees want to know whether they'll get paid. Constituents want to know what it means for services. People want to know, what does this mean for me?"

Although Detroit's slide from an industrial powerhouse into financial ruin had been long and slow, and the prospect of bankruptcy has loomed here for months, residents were only beginning to wrestle with how the move might change life. If immediate shifts were, at least for now, barely noticeable — "It's all just court papers," in the words of one resident — many said they were anxious about what the coming months will mean for a city truly at a crossroads. Were they on the brink of a fresh start, with faster response times by the police and more working streetlights, as state officials have promised, or a further hollowing out of a city that lost a quarter of its population in the last decade?

"If we're broke, we're broke," Cicero Lewis said as he walked down a street where only a few houses remained, along with occasional mounds of trash, a forgotten pair of boots, a discarded suitcase. "If this is going to help the city, then O.K.," Mr. Lewis said. "Bankruptcy could be good. Let's see."

For some, and even some who predict that bankruptcy might ultimately revive the city, doubts linger about the way Detroit, which is more than 82 percent black and dominated by Democrats, finds itself in this moment. Gov. Rick Snyder, who is white and a Republican, authorized the bankruptcy filing, which required no approval from the mayor or council. "No deals should happen without our elected officials," said the Rev. Charles Williams II, who leads the Detroit chapter of the National Action Network, adding that protests were planned next week. "When did the governor become our mayor?"

But as word of the bankruptcy spread, officials here raced on Friday to assure workers and residents that business was proceeding as usual. Kevyn D. Orr, the state-appointed emergency manager, was meeting with all city department heads, his spokesman said, and sending e-mail to the city's nearly 10,000 workers. The city has said that it hopes to emerge from bankruptcy by the fall of 2014, an ambitious timeline for a complex case that court filings say involves more than 100,000 creditors.

For now, Mr. Orr said his message to the public will be simple: "We're open for business. Your garbage truck is going to come. Potholes are going to be filled — hopefully better than in the past."

In an interview, Mr. Snyder said that his greatest worry in this situation was that some in the general public might be confused or worse. "This is something that can be scary to people," he said, adding later, "This is about continuing normal services and giving people assurance that normal services are going to happen."

As officials have tried to explain the circumstances to residents here in the weeks leading up to the bankruptcy, they repeatedly pointed to the city's diminished services — broken ambulances and uncollected garbage — even as Detroit's ability to pay for services was shrinking. The city now owes 38 cents of every dollar to pay its debts, the state says, and, if left alone, that is expected to leap to 65 cents for every dollar by 2017.

"It's obvious we need some help," said Norman Mighty, a resident who said he was unsurprised by the bankruptcy filing, relieved even that it had finally come. A 16-year-old girl, who said she rarely emerged from her house because it was the only one left on her darkened block, said any change would be good. And, at a club where members had to replace first-floor windows with bricks to end the break-ins and where members say the police took three days to respond to a burglary report, Charlene Kaslowski sounded hopeful. "Maybe it really can come back," she said.

Others were unconvinced, and troubled by the uncertainty of the course ahead and the prospect of added stigma in a city that has already had its share. Some suggested that if bankruptcy was a preferable alternative, other major cities like New York, would have ventured there during their own financial crises rather than solving them outside of court. Some had long lists of questions: When does this end? How much will the thousands of retired city workers lose in benefits? And what will a post-bankruptcy Detroit look like?

"It's the word bankruptcy," Sharon Bowman said, "it just doesn't sit right with me." Ms. Bowman, who has lived here for nearly five decades, recalled an instance when she called 911 because she suspected she was having a stroke, then waited, she said, for what felt like ages. "It's a total disaster here," she said. "I tell you what — if I was younger or had more education, I would zoom out of here."

12.07 | 0 komentar | Read More

DealBook: S.E.C. Charges Are Latest Test for Steven Cohen

10:18 p.m. | Updated

After a long-running investigation into insider trading at the hedge fund SAC Capital Advisors, an inquiry that has produced several guilty pleas and a record $616 million civil penalty, the government on Friday brought a case for the first time against the fund's billionaire owner, Steven A. Cohen.

In a civil action, the Securities and Exchange Commission accused Mr. Cohen of failing to supervise former employees who face criminal charges. The case, filed as an administrative proceeding at the agency rather than a lawsuit in federal court, contends that he ignored "red flags" that should have led him to investigate suspicious trading activity at SAC and take steps to prevent illegal conduct. If the S.E.C. prevails in its action against Mr. Cohen, there are a range of possible penalties, including assessing additional fines, barring Mr. Cohen from managing money for clients, or banning him from the financial services industry for life.

Although the case stops short of accusing Mr. Cohen of fraud or insider trading, it represents the first government action brought directly against him after an inquiry that has persisted for nearly a decade.

And while the government has taken its first direct shot at Mr. Cohen, it is unlikely to be the last. Federal prosecutors and the F.B.I. are continuing to build a criminal case against SAC, according to people briefed on the matter, who spoke on the condition of anonymity. The authorities expect to announce charges as soon as this summer, the people said, noting that prosecutors might indict other traders at SAC or the fund itself, a move that would effectively destroy the company.

Though a legal deadline to file some insider trading charges is approaching, authorities are planning to navigate around that requirement by filing a broader criminal conspiracy case against SAC, these people said. As long as one of the trades cited in the case took place in the last five years, then the government has leeway to include older trades to highlight a continuing scheme.

Mr. Cohen is not out of the woods, either. In May, federal authorities issued subpoenas to Mr. Cohen and five of his senior executives to testify before a grand jury. Mr. Cohen declined to testify, exercising his constitutional right against self-incrimination, the people briefed on the matter said.

Even if a criminal case never materializes, the S.E.C.'s action on Friday is a blow to Mr. Cohen, who has built SAC, which is based in Stamford, Conn., into one of the world's largest and most powerful hedge funds, with about 1,000 employees and $15 billion in assets at the start of the year. It has a nearly unparalleled investment record, delivering nearly 30 percent annual returns, on average, over two decades. SAC's investors, however, have already withdrawn billions of dollars from the fund this year as the government's investigation has intensified.

Mr. Cohen, 57, thought he put his legal troubles behind him in March when SAC agreed to pay a $616 million civil penalty to the S.E.C. The case resolved insider trading actions connected to the suspected misconduct of two former employees, Mathew Martoma and Michael S. Steinberg, though they did not directly implicate Mr. Cohen.

The S.E.C. filed its latest case, which accused Mr. Cohen of failing to supervise the two employees, a day before the five-year legal deadline to bring a case related to trades that Mr. Martoma made in July 2008.

"Hedge fund managers are responsible for exercising appropriate supervision over their employees to ensure that their firms comply with the securities laws," Andrew J. Ceresney, co-director of enforcement at the S.E.C., said in a statement.

On Friday, Jonathan Gasthalter, an SAC spokesman, said the S.E.C.'s action had no merit. "Steve Cohen acted appropriately at all times and will fight this charge vigorously," he said. "The S.E.C. ignores SAC's exceptional supervisory structure, its extensive compliance policies and procedures, and Steve Cohen's strong support for SAC's compliance program."

The firm's compliance policies and procedures have come under fire as many former employees have found themselves under government scrutiny. Including Mr. Martoma and Mr. Steinberg, nine former SAC employees have been tied to insider trading while at the firm; four have pleaded guilty to criminal charges. Mr. Cohen has not been accused of any criminal wrongdoing.

Mr. Martoma, 39, and Mr. Steinberg, 40, have each pleaded not guilty to criminal insider trading charges and face separate trials in November. Lawyers for each declined to comment on the S.E.C. action against Mr. Cohen. Representatives for the United States attorney's office for the Southern District of New York and the F.B.I. also declined to comment.

Despite the substantial investor withdrawals, Mr. Cohen has vowed to continue managing funds for outside clients, to whom he charges some of the highest fees in the hedge fund industry. Yet Mr. Cohen could return investors' money and still run a sizable business that managed his own personal fortune. His wealth accounts for more than half of the fund's $15 billion in assets.

The S.E.C.'s case against Mr. Cohen intensified this spring, people briefed on the case said, soon after the agency struck the settlement with the fund. The agency sent him a so-called Wells notice in late May, the people said, warning that the agency's investigators would soon recommend charges.

Mr. Cohen's lawyers pushed back in recent weeks, outlining a potential defense to the charges. But the agency decided to proceed, one person said, holding a special meeting with the agency's five commissioners to consider the charges. The meeting was separate from the agency's typical weekly gathering to discuss enforcement cases, a measure that allowed the agency to keep a tight lid on the case.

The case is not a slam-dunk. The S.E.C. must show not only that Mr. Martoma and Mr. Steinberg violated the law and that they operated under Mr. Cohen's supervision, but also that Mr. Cohen failed to "reasonably" supervise them.

It could benefit the agency that the case will appear on its home turf. Instead of a being heard by a judge in federal court, the proceeding will take place before an S.E.C. administrative law judge, who will determine what penalties, if any, should be assessed against Mr. Cohen. The S.E.C. says that the illicit trading earned SAC profits and avoided losses totaling more than $275 million.

Friday's filing provides additional details about two sets of trades made by SAC in 2008. The first involved Mr. Cohen's collaboration with Mr. Martoma in accumulating large positions in the pharmaceutical companies Elan and Wyeth, which at the time were jointly developing an Alzheimer's drug. In November, federal prosecutors charged Mr. Martoma with obtaining secret information from a doctor overseeing the drug's clinical trials. That doctor, Sidney Gilman, has agreed to testify against Mr. Martoma.

Inside SAC, a number of other drug stock analysts at the fund objected to the large positions, but Mr. Cohen told them that he was following Mr. Martoma's advice because he was "closer to it than you," according to the court filing. The S.E.C. said that in a later instant message, Mr. Cohen said that it seemed as if Mr. Martoma "has a lot of good relationships in this area."

Mr. Cohen also knew of a second doctor who might possibly have had secret information about the clinical trials, the S.E.C. said. Rather than express concern about the fund possessing potentially confidential information, Mr. Cohen encouraged Mr. Martoma to talk further with the doctor, according to the court filing.

On July 21, 2008, after building sizable holdings in Elan and Wyeth, SAC began aggressively selling shares in the two companies. The day before, on a Sunday, Mr. Martoma had a 20-minute phone call with Mr. Cohen. It is unclear what was said during that conversation, but Mr. Cohen, in a deposition that he gave to the S.E.C. last year, said that Mr. Martoma told him he had lost conviction in the positions.

The second trade at issue in the case involves shares of Dell. The S.E.C. also faults Mr. Cohen for not ferreting out what they suspect was illegal trading in shares of Dell in August 2008 by Mr. Steinberg and another former SAC employee, Jon Horvath, who pleaded guilty to criminal charges last year.

Friday's court filing cites an e-mail about Dell that an SAC trader forwarded to Mr. Cohen, who was working at his summer home in the Hamptons. The e-mail was from Mr. Horvath, who worked under Mr. Steinberg, saying that he had a "2nd hand read from someone at the company" and went on to provide detailed information about Dell's financial performance.

"Please keep this to yourself as obviously not well known," Mr. Horvath wrote.

The S.E.C. says that based on this e-mail, Mr. Cohen should have taken prompt action to determine whether the fund was engaged in insider trading. Instead, according to the agency, Mr. Cohen quickly sold his small Dell position just before the company announced earnings.

Three hours after the earnings release, Mr. Cohen e-mailed Mr. Steinberg: "Nice job on Dell."

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