Massachusetts fines Morgan Stanley over Facebook IPO

Morgan Stanley , the lead underwriter for Facebook Inc's initial public offering, will pay a $5 million fine to Massachusetts for violating securities laws governing how investment research can be distributed.
Massachusetts' top securities regulator, William Galvin, charged on Monday that a top Morgan Stanley banker had improperly coached Facebook on how to disclose sensitive financial information selectively, perpetuating what he calls "an unlevel playing field" between Wall Street and Main Street.
Morgan Stanley has faced criticism since Facebook went public in May for revealing revised earnings and revenue forecasts to select clients before the media company's $16 billion initial public offering.
This is the first time a case stemming from Morgan Stanley's handling of the Facebook offering has been settled.
Facebook had privately told Wall Street research analysts about softer forecasts because of less robust mobile revenues. A top Morgan Stanley banker coached Facebook executives on how to get the message out, Galvin said.
A Morgan Stanley spokeswoman said on Monday the company is "pleased to have reached a settlement" and that it is "committed to robust compliance with both the letter and the spirit of all applicable regulations and laws." The company neither admitted nor denied any wrongdoing.
Galvin, who has been aggressive in policing how research is distributed on Wall Street ever since investment banks reached a global settlement in 2003, said the bank violated that settlement. He fined Citigroup $2 million over similar charges in late October.
"The conduct at Morgan Stanley was more egregious," he said in an interview explaining the amount of the fine. "With it we will get their attention and begin to take steps in restoring some confidence for retail investors to invest."
Galvin also said that his months-long investigation into the Facebook IPO is far from over and that he continues to review the other banks involved. Goldman Sachs and JP Morgan also acted as underwriters. The underwriting fee for all underwriters was reported to be $176 million at the time, or 1.1 percent of the proceeds.
As lead underwriter, Morgan Stanley took in $68 million in fees from the IPO, according to a Thomson Reuters estimate.
Massachusetts did not name the Morgan Stanley banker in its documents but personal information detailed in the matter suggest it is Michael Grimes, a top technology banker who was instrumental in the Facebook IPO.
The report says the unnamed banker joined Morgan Stanley in 1995 and became a managing director in 1998, dates that correlate with Grimes' career at the firm. It also says the banker works in Morgan Stanley's Menlo Park, California, office, where Grimes also works.
Grimes did not immediately respond to a request for comment, and was not accused of any wrongdoing by name.
The state said the banker helped a Facebook executive release new information and then guided the executive on how to speak with Wall Street analysts about it. The banker, Galvin said, rehearsed with Facebook's Treasurer and wrote the bulk of the script Facebook's Treasurer used when calling the research analysts.
A number of Wall Street analysts cut their growth estimates for Facebook in the days before the IPO after the company filed an amended prospectus.
Facebook's treasurer then quickly called a number for Wall Street analysts providing even more information.
The banker "was not allowed to call research analysts himself, so he did everything he could to ensure research analysts received new revenue numbers which they then provided to institutional investors," Galvin said.
Galvin's consent order also says that the banker spoke with company lawyers and then to Facebook's chief financial officer about how to prove an update "without creating the appearance of not providing the underlying trend information to all investors."
The banker and all others involved with the matter at Morgan Stanley are still employed by the company, a person familiar with the matter said.
Retail investors were not given any similar information, Galvin said, saying this case illustrates how institutional investors often have an edge over retail investors.

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ARM security improvement to speed mobile e-commerce

 British chip designer ARM Holdings and its partners Gemalto and Giesecke & Devrient have launched a new security standard for smartphones that can speed up e-commerce transactions.
Trustonic, a joint venture between the companies formed in April, said the security standard could be built into every level of a device, from the chip through the operating system to applications.
Ben Cade, Trustonic's chief executive, said it would eliminate the need for third-party devices, like bank card readers and secure ID tags, and enable content to be shared easily between devices.
He said the technology could reduce the time needed for an e-commerce transaction on a smartphone to seven seconds from the two and a half minutes typical today.
"It will enable us to trust our smart connected devices to protect us as they deliver essential services and innovative user experiences," he said.
Security is becoming increasingly important for smartphone users as more operations move from PCs to mobile devices.
Trustonic has signed up partners ranging from chipmakers NVIDIA and Samsung Electronics to payments company Mastercard and content provider 20th Century Fox Home Entertainment, Cade said.

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Online shopping to breathe new life into run-down sheds

 Owners of run-down warehouses on the edge of European cities could be sitting on goldmines because online shopping will force firms to seek distribution sites closer to customers who think speedy delivery is the norm.
In an increasingly fierce market where the likes of Amazon and Tesco pledge next-day or same-day delivery in specific time slots, warehouse rents could rise 40 percent over the next decade, property consultant CBRE said.
"Your industrial estate (near heavily populated areas) is the high street of the future," said Jonathan Holland, senior manager of Legal & General Property's industrial fund, which has 770 million pounds ($1.25 billion) under management.
"We are very much looking at owning warehouses around major conurbations."
Some 43 percent of European Union citizens shop online, the European Commission said in February, up from 26 percent six years ago. They were expected to fuel a 12-15 percent growth in online sales across the region over the next five years, Forrester Research predicted.
Meanwhile, falling sales in austerity-hit Britain have forced retail property values down 28 percent since end-2007, data from Investment Property Databank showed. Values in euro zone countries fell 5 percent over the same period, CBRE said.
The yield, or annual rent as a percentage of the property value, on an industrial warehouse in a good location in Europe was 7.8 percent at the end of September compared with 5.8 percent for offices and 5.2 percent for shops, CBRE said.
Industrial yields depend more on lease length and the financial strength of the tenant than location, compared with offices or shops, and would "edge downwards" where demand from retailers was strong, CBRE said.
Retailers currently favor large sites in locations away from big population centers but with good transport links.
Amazon's huge warehouses include sites in Dunfermline, Scotland and Rheinberg, Germany while Marks & Spencer will open a warehouse the size of 11 soccer fields in Castle Donington, Leicestershire, next year.
That is changing, said Amaury Gariel, managing director of CBRE's European industrial logistics team.
Places such as Croydon, 16 kilometers south of central London, strewn with empty office blocks and suffering high unemployment, and Créteil, a scruffy suburb 19 km southeast of Paris, are examples of areas that could be targeted as they are close to major highways and large local workforces, Gariel said.
Warehouse rents at such sites could rise 20-40 percent over the next decade, he said, citing the greatest demand in areas near the biggest European cities such as Amsterdam, London and Paris for sites that have typically been used by mail delivery firms and food distributors.
A tendency by governments to prioritize such areas for homes would squeeze supply and push prices higher, he said.
Retailers and property investors are at "a tipping point" in waking up to the changing real estate map for distribution points in Europe, Holland said.
Amazon is on the hunt for about 20 sheds close to British cities while Asda and Tesco are opening so-called 'dark stores' - distribution centers which look like supermarkets on the inside but are closed to customers - across Britain.
Industrial developer Prologis has bought a significant number of such sites near large towns and cities, such as Milton Keynes in Britain and Hannover in Germany, to meet future demand, European president Philip Dunne told Reuters.
Retailers face obsolescence unless they recognize how the type of property they rent needs to change, Gariel said.
"We are on the first page of the story regarding new ways to distribute goods. What happens if retailers do not recognize it? Just look at what happened to the fax and the telegram.

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"Hebrew Hammer" sequel profits from crowdfunding campaign

The Hebrew Hammer vs. Hitler," the sequel to 2003's "The Hebrew Hammer," will begin filming next year, after an innovative crowdfunding campaign that's raised $35,000 on Jewcer.com, the filmmakers announced Tuesday.
Adam Goldberg will return in the lead role, with principle photography expected to begin in May 2013.
In the film, Goldberg's character, now married and enjoying the good life in suburbia, is forced to dust off his black-leather couture to confront a new menace: a time-traveling Hitler intent on altering key moments in Jewish history.
The original film launched at Sundance and had a limited theatrical release before being picked up by Comedy Central in a five-year deal.
"It's been amazing," filmmaker Jonathan Kesselman, writer and director of both movies, said in a statement. "The fans are making this happen. The cult status of the first movie attracted millions of fans around the world, making crowd-funding a viable option. Funding is now in the hands of fans who can help make the movies they want to see."
Kesselman negotiated for the rights to the sequel with John Schmidt at ContentFilm, ending a near decade-long tussle and several attempts at getting it made.

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Instagram says no plans to put user photos in ads

 Instagram, the popular photo-sharing service owned by Facebook Inc, said on Tuesday it has "no plans" to incorporate user photos into ads in response to a growing public outcry over new privacy policies unveiled this week.
Instagram Chief Executive Kevin Systrom said in a blog post that users had incorrectly interpreted Instagram's revised terms of service, released on Monday, to mean that user photos would be sold to others without compensation.
"This is not true and it is our mistake that this language is confusing," Systrom said. "To be clear: it is not our intention to sell your photos. We are working on updated language in the terms to make sure this is clear."
But Systrom said Instagram may display users' profile pictures and information about who they follow as part of an ad - a social marketing technique similar to what Facebook uses in its "sponsored stories" ad product.
He added that Instagram will not incorporate users' uploaded photos as ads because the service wants "to avoid things like advertising banners."
Instagram, which is free to use, triggered an uproar this week when it revised its terms of service in order to begin carrying advertising.
Facebook bought the fast-growing photo service - now with 100 million users - earlier this year in a cash-and-stock deal valued initially at $1 billion. The transaction closed in September at $715 million, reflecting a decline in the value of Facebook shares.

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FBI question Benghazi consulate attack suspect

TUNIS, Tunisia (AP) — After months of asking, agents from the FBI questioned the only known suspect in the Sept. 11 attack on the U.S. consulate in Benghazi that killed four diplomats, the suspect's Tunisian lawyer told The Associated Press Saturday.
Ali Harzi, a Tunisian, was detained in Turkey and extradited to Tunisia in October where authorities have said he is "strongly suspected" of being involved in the attack.
His lawyer, Anwar Oued-Ali, added that Harzi was also questioned about an attack on the U.S. embassy in Tunisia, a few days later, suggesting the American authorities are looking into if there is a connection between the two attacks.
The Sept. 11 assault by armed men in the Libyan city of Benghazi killed U.S. Ambassador Chris Stephens and three other American diplomats. Members of an Islamist militia, Ansar al-Sharia are suspected in the strike, but there has been little progress in the Libya-based investigation into the attack.
A few days later, a mob attacked the U.S. embassy in Tunis, destroying property and an American school in the area, resulting in four deaths. The attack was believed to be instigated by a local group also called Ansar al-Sharia, but it is unclear if it is connected to the Libyan organization.
In early November, Republican senators Lindsey Graham and Saxby Chambliss announced that Tunisia had agreed to allow the FBI to interview Harzi, but it took another month and a half to organize the interview due to legal questions over any infringements on Tunisian sovereignty.
In the end, three FBI investigators using a Moroccan translator posed questions to Harzi for three hours through the Tunisian judge presiding over the case.
Harzi's defense team was not allowed to attend the questioning on the grounds that he was being interviewed as a "witness" rather than a defendant.
Harzi is being charged by the Tunisians for "membership in a terrorist organization." Harzi denies the charges.

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Rebels threaten to storm 2 Syrian Christian towns

BEIRUT (AP) — Rebels have threated to storm two predominantly Christian towns in central Syria if residents do not "evict" government troops they say are using the towns as a base to attack nearby areas.
A video released by rebels showed Rashid Abul-Fidaa, who identified himself as the commander of the Ansar Brigade for Hama province, calling on locals in Mahrada and Sqailbiyeh to rise up against President Bashar Assad's forces or prepare for an assault.
"Assad's gangs in the cities are shelling our villages with mortars and rockets destroying our homes, killing our children and displacing our people," said Abdul-Fidaa, who wore an Islamic headband and was surrounded by gunmen. "You should perform your duty by evicting Assad's gangs," he said. "Otherwise our warriors will storm the hideouts of the Assad gangs."
Abdul-Fidaa accused regime forces of taking positions in the two towns in order to "incite sectarian strife" between Christians and the predominantly Sunni opposition. Assad belongs to the Alawite minority sect, an off-shoot of Shiite Islam.
The threat comes just two days after a U.N. team investigating human rights abuses in Syria accused anti-Assad militants of hiding among the civilian population, triggering strikes by government artillery and the air force.
The Britain-based Syrian Observatory for Human Rights, the activist group which reported the rebel ultimatum on Saturday, said such an attack by rebels could force thousands of Christians from their homes.
Russia's foreign minister, meanwhile, said that Moscow would welcome any country's offer of a safe haven to Assad, but underlined that Moscow itself has no intention of giving him shelter if he steps down.
Sergei Lavrov also said that Syria has consolidated its chemical weapons into one or two locations to protect them from a rebel onslaught. Russia, which has military advisers training Syria's armed forces, has kept close watch over Damascus's chemical arsenal, Lavrov added.
Syria refuses to confirm or deny if it has chemical weapons but is believed to have nerve agents as well as mustard gas. It also possesses Scud missiles capable of delivering them.
Concerns over the arsenal have escalated as the Assad regime suffers losses on the battlefield. U.S. intelligence officials have said it may be readying chemical weapons and could be desperate enough to use them. Both Israel and the U.S. have also expressed concerns the weapons could fall into militant hands if the regime crumbles.
Syria's conflict started 21 months ago as an uprising against Assad, whose family has ruled the country for four decades. But the bloody crackdown that followed led rebels to take up arms, and the ensuing fighting transformed into a civil war. According to activists, more than 40,000 people have been killed since March 2011.
Christians, who make up about 10 percent of Syria's population, say they are particularly vulnerable to the violence sweeping the country of 22 million people. They are fearful that Syria will become another Iraq, with Christians caught in the crossfire between rival Islamic groups.
Clashes between troops and rebels in the central city of Homs, Syria's third largest, have already displaced tens of thousands of Christians, most of whom either fled to the relatively safe coastal areas or to neighboring Lebanon.
Rami Abdul-Rahman, who heads the Observatory, said some Christians and Alawites have also left Hama province in the past several days to escape violence. He said some of them found shelter in the coastal city of Tartus.
In Damascus, the new head of the Greek Orthodox Church of Antioch said that Christians in Syria had deep roots in the country and were not part of the conflict. Speaking to reporters in the capital, Patriarch John X. Yazigi, urged rival factions to negotiate a settlement.
Violence continued elsewhere in the country on Saturday.
The Observatory said a car bomb went off in the Damascus neighborhood of Qaboun, killing at least five people and wounding others. A Syrian official in the capital confirmed the blast but had no immediate words on casualties.
Elsewhere, the Syrian army said in a statement carried on state-run TV that it had repelled a rebel attack on a military base that killed a regimental commander in the Damascus suburb of Chebaa.
And in Damascus, the state-run news agency SANA said gunmen assassinated Haider al-Sammoudi, a cameraman for the government's TV station. Several journalists working for state media have been assassinated over the past months.
In another development, 11 rebel groups said they have formed a new coalition, the Syrian Islamic Front.
A statement issued by the new group, dated Dec. 21 and posted on a militant website Saturday, described the group as "a comprehensive Islamic front that adopts Islam as a religion, doctrine, approach and conduct."
Several rebel groups have declared their own coalitions in Syria, including an "Islamic state" in the embattled northern city of Aleppo.
The statement said the new group will work to avoid differences or disputes with the other Islamic groups.
Syrian authorities meanwhile handed over to Beirut three Lebanese citizens who were killed last month in a clash with Syrian troops shortly after they crossed the border. Syria has so far returned 10 bodies to the Lebanese authorities and says it has no more.

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Egypt's vice president quits

CAIRO (AP) — Egypt's state TV says Vice President Mahmoud Mekki has resigned.
Mekki's Saturday resignation was announced with more than five hours to go of voting in the second and final phase of a referendum on a disputed, Islamist-backed constitution. Mekki, a career judge, has said he intends to quit once the charter is adopted. The new constitution eliminates the post of vice president.
However, a statement by Mekki read on state TV hinted that the motive of his hurried departure could be linked to the policies of Islamist President Mohammed Morsi.
He said he first submitted his resignation last month but events forced him to stay on.
"I have realized a while ago that the nature of politics don't suit my professional genesis as a judge," he wrote.

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Ex-Tunisian dictator's property goes under hammer

TUNIS, Tunisia (AP) — Tunisian authorities are putting property confiscated from ousted Tunisian dictator Zine El Abidine Ben Ali up for auction. That includes a pair of miniature gold sphinxes, a diamond-encrusted pen and a staggering 39 luxury cars.
Officials hope the sale, which was inaugurated by Tunisia's Prime Minister Hamadi Jebali in Tunis Saturday, will fetch some 20 million dinar ($12.9 million) for the state.
One of the rarities up for grabs is a super-pricy Mercedes that belonged to Ben Ali's nephew. Mohammed Lassaad Hamayed of Tunisia's confiscation committee calls the car "a handmade gem made of carbon fibers that costs more than €2 million ($2.6 million)."
He says "only Mohamed VI (the King of Morocco) has a similar one."
Ben Ali was ousted by a popular uprising in January 2011.

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Egypt's central bank governor quits

CAIRO (AP) — State television says Egypt's central bank governor has resigned.
Farouq el-Oqdah's resignation is the second such high profile move on Saturday. Earlier on the day, Vice President Mahmoud Mekki resigned, saying he realized that politics did not suit his professional background as a judge.
The brief TV report did not say why el-Oqdah quit, but it ends days of media speculations about his intentions. Islamist President Mohammed Morsi and his Prime Minister Hesham Kandil met with el-Oqdah earlier this week in what media reports said was an attempt to dissuade him from leaving.
His departure comes at a time when Egypt's pound has been losing value against the U.S. dollar and the postponement of a deal with the IMF for a much needed loan of $4.8 billion.

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