DealBook: Japan to Sell $10 Billion Stake in Cigarette Firm

TOKYO – The Japanese government is set to loosen its grip on Japan Tobacco, the world’s third-largest tobacco company, by selling a third of its stake in a sale that will net the country about $10 billion.

The Finance Ministry, which owns just over 50 percent of the former state monopoly, will sell 333 million of its shares in the cigarette manufacturer, according to a company statement issued on Monday.

The deal will be priced next month, from March 11 to 13, the statement said. In the run-up to the sale, Japan Tobacco will buy back up to 250 billion yen ($2.7 billion) of its shares.

Under laws passed in 2011 after a devastating earthquake and tsunami hit Japan, proceeds of the sale of Japan Tobacco shares will go toward rebuilding the country’s battered northeast coast. The reconstruction costs have threatened to weigh on Japan’s public finances at a time when public debt is twice the size of its economy.

It is an opportune time for the Japanese government to sell. Japan’s stock market has rallied since mid-November, and Japan Tobacco’s shares have tracked the market’s ascent, climbing 20 percent in the last three months.

Shares in Japan Tobacco closed 1.43 percent higher on Monday, at 2,901 yen, before the planned sale was announced. At that price, the government’s share sale would be valued at roughly 967 billion yen.

Japan has already been reducing its stake and involvement in the cigarette maker, which traces its origins to a Finance Ministry bureau set up in 1898 to create a national tobacco monopoly that lasted until 1985.

Even after the company went public, the Finance Ministry held two-thirds of its shares until 2004, when it reduced its stake to 50.1 percent, or roughly one billion shares. Other investors in Japan Tobacco include Mizuho Trust & Banking, Goldman Sachs and the Children’s Investment Fund Management.

The position in Japan Tobacco has put the government in a controversial position.

The government has squeezed more funds from its smokers, raising the price of a pack of cigarettes about 40 percent in 2010, its single largest increase in tobacco taxes. Still, cigarettes remain relatively cheap in Japan, at about $4.30 a pack.

But antismoking advocates have blamed the Japanese government’s continued ownership of Japan Tobacco – whose brands include Camel, Winston and Mild Seven – for the country’s delay in passing laws to protect nonsmokers from cigarette smoke, for example, and more stringently regulating of tobacco-related marketing.

In a 2012 report, the Washington-based Global Business Group on Health said Japan’s ownership of Japan Tobacco shares “leads to a national conflict of interest, in which the government treats smoking as a behavioral issue rather than a health concern.”

Though smoking rates have started to decline in recent years, the Japanese remain heavy smokers, consuming about 1,841 cigarettes a person, according to data compiled last year by the World Lung Foundation and American Cancer Society. That compared with about 1,000 cigarettes a person in the United States.

To make up for declining cigarette consumption at home, Japan Tobacco has aggressively expanded overseas, acquiring Britain’s Gallaher Group in 2007 for $15 billion, and adding the Silk Cut and Benson & Hedges brands to its portfolio. The company has also made a push into packaged foods and soft drinks, as well as pharmaceuticals.

The government’s sale of Japan Tobacco shares is part of a wider effort to raise money to finance reconstruction from the country’s natural and nuclear disasters in 2011. The government also plans to sell shares of Japan Post Holdings, which runs the country’s postal system and also acts as its biggest bank.

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African Nations and U.N. Offer Plan to Stabilize Congo

NAIROBI, Kenya — Leaders of several African countries and United Nations officials on Sunday announced a new “framework” to tackle instability in the Democratic Republic of Congo, a war-torn country that has become synonymous with suffering and has eluded countless attempts to build a lasting peace over the years.

The new effort calls for greater cooperation between Congo’s neighbors — several of which are suspected of sponsoring violence inside Congo — and political changes by the Congolese government. United Nations and African officials are also proposing a new beefed-up “peace enforcement” brigade of about 2,000 soldiers to go after rebel groups in Congo.

“We can only put an end to recurring cycles of violence through an innovative approach,” said Secretary General Ban Ki-moon of the United Nations, who witnessed the signing of the peace framework in Addis Ababa, Ethiopia, on Sunday.

But many Congo analysts doubt that this agreement, by itself, is going to make much of a difference in a place where myriad rebel groups haunt the hills, massacring civilians and raping women with impunity.

“If not accompanied by the swift appointment of a U.N. envoy and the initiation of a focused peace process between Congo, Rwanda and Uganda led by that U.N. envoy, this framework agreement will end up having no impact on ending the violence in eastern Congo,” said John Prendergast, co-founder of the Enough Project, a nonprofit anti-genocide group.

Parts of Congo, especially in the east, along the borders with Uganda and Rwanda, have been mired in various degrees of rebellion and mayhem since the mid-1990s, when rebel groups overthrew Mobutu Sese Seko, a Western-backed dictator who set new standards for wanton corruption. Congo is home to vast mineral riches, and many rebel groups who now control territory sustain their brutality by seizing minerals or taxing the mineral trade.

This fall, a relatively new rebel outfit, called the March 23 Movement, or M23, captured the provincial capital of Goma, though under intense international pressure it soon pulled out. United Nations investigators have accused Rwanda and Uganda of providing covert support to the M23.

The United Nations has more than 17,000 military personnel in Congo, but the peacekeepers have been roundly criticized for being too passive. Several African countries, including Tanzania and Mozambique, have discussed contributing troops to a new intervention brigade to confront and disarm rebel groups in Congo. The plan is for the new brigade to work with the other peacekeepers but engage in combat more often.

But analysts warn that this new brigade, which still needs to be approved by the United Nations Security Council, will be effective only if it is willing to go toe-to-toe with rebel fighters and take heavy casualties — as peacekeepers from Uganda and Burundi have been doing in Somalia, with some success. Many observers say the United Nations has so far been unwilling to do this in Congo.

Jason Stearns, the author of a recent, well-regarded book on Congo and a blog that is considered required reading by Congophiles, said there had not been a genuine peace process in Congo since 2006.

“So are we back in a peace process?” Mr. Stearns asks on his blog. “Not really. Or more precisely: We don’t know yet. The agreement is more a statement of principles than a concrete action plan.”

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Analysis: The near impossible battle against hackers everywhere

SAN FRANCISCO (Reuters) - Dire warnings from Washington about a "cyber Pearl Harbor" envision a single surprise strike from a formidable enemy that could destroy power plants nationwide, disable the financial system or cripple the U.S. government.

But those on the front lines say it isn't all about protecting U.S. government and corporate networks from a single sudden attack. They report fending off many intrusions at once from perhaps dozens of countries, plus well-funded electronic guerrillas and skilled criminals.

Security officers and their consultants say they are overwhelmed. The attacks are not only from China, which Washington has long accused of spying on U.S. companies, many emanate from Russia, Eastern Europe, the Middle East, and Western countries. Perpetrators range from elite military units to organized criminal rings to activist teenagers.

"They outspend us and they outman us in almost every way," said Dell Inc's chief security officer, John McClurg. "I don't recall, in my adult life, a more challenging time."

The big fear is that one day a major company or government agency will face a severe and very costly disruption to their business when hackers steal or damage critical data, sabotage infrastructure or destroy consumers' confidence in the safety of their information.

Elite security firm Mandiant Corp on Monday published a 74-page report that accused a unit of the Chinese army of stealing data from more than 100 companies. While China immediately denied the allegations, Mandiant and other security experts say the hacker group is just one of more than 20 with origins in China.

Chinese hackers tend to take aim at the largest corporations and most innovative technology companies, using trick emails that appear to come from trusted colleagues but bear attachments tainted with viruses, spyware and other malicious software, according to Western cyber investigators.

Eastern European criminal rings, meanwhile, use "drive-by downloads" to corrupt popular websites, such as NBC.com last week, to infect visitors. Though the malicious programs vary, they often include software for recording keystrokes as computer users enter financial account passwords.

Others getting into the game include activists in the style of the loosely associated group known as Anonymous, who favor denial-of-service attacks that temporarily block websites from view and automated searches for common vulnerabilities that give them a way in to access to corporate information.

An increasing number of countries are sponsoring cyber weapons and electronic spying programs, law enforcement officials said. The reported involvement of the United States in the production of electronic worms including Stuxnet, which hurt Iran's uranium enrichment program, is viewed as among the most successful.

Iran has also been blamed for a series of unusually effective denial-of-service attacks against major U.S. banks in the past six months that blocked their online banking sites. Iran is suspected of penetrating at least one U.S. oil company, two people familiar with the ongoing investigation told Reuters.

"There is a battle looming in any direction you look," said Jeff Moss, the chief information security officer of ICANN, a group that manages some of the Internet's key infrastructure.

"Everybody's personal objectives go by the wayside when there is just fire after fire," said Moss, who also advises the U.S. Department of Homeland Security.

HUNDREDS OF CASES UNREPORTED

Industry veterans say the growth in the number of hackers, the software tools available to them, and the thriving economic underground serving them have made any computer network connected to the Internet impossible to defend flawlessly.

"Your average operational security engineer feels somewhat under siege," said Bruce Murphy, a Deloitte & Touche LLP principal who studies the security workforce. "It feels like Sisyphus rolling a rock up the hill, and the hill keeps getting steeper."

In the same month that President Barack Obama decried enemies "seeking the ability to sabotage our power grids, our financial institutions, our air traffic control systems," cyber attacks on some prominent U.S. companies were reported.

Three leading U.S. newspapers, Apple Inc, Facebook Inc, Twitter and Microsoft Corp all admitted in February they had been hacked. The malicious software inserted on employee computers at the technology companies has been detected at hundreds of other firms that have chosen to keep silent about the incidents, two people familiar with the case told Reuters.

"I don't remember a time when so many companies have been so visibly 'owned' and were so ill-equipped," said Adam O'Donnell, an executive at security firm Sourcefire Inc, using the hacker slang for unauthorized control.

Far from being hyped, cyber intrusions remain so under-disclosed — for fear leaks about the attacks will spook investors — that the new head of the FBI's cyber crime effort, Executive Assistant Director Richard McFeely, said the secrecy has become a major challenge.

"Our biggest issue right now is getting the private sector to a comfort level where they can report anomalies, malware, incidences within their networks," McFeely said. "It has been very difficult with a lot of major companies to get them to cooperate fully."

McFeely said the FBI plans to open a repository of malicious software to encourage information sharing among companies in the same industry. Obama also recently issued an executive order on cyber security that encourages cooperation.

The former head of the National Security Agency, Michael Hayden, supports the use of trade and diplomatic channels to pressure hacking nations, as called for under a new White House strategy that was announced on Wednesday.

"The Chinese, with some legitimacy, will say 'You spy on us.' And as former director of the NSA I'll say, 'Yeah, and we're better at it than you are," said Hayden, now a principal at security consultant Chertoff Group.

He said what worries him the most is Chinese presence on networks that have no espionage value, such as systems that run infrastructure like energy and water plants. "There's no intellectual property to be pilfered there, no trade secrets, no negotiating positions. So that makes you frightened because it seems to be attack preparation," Hayden said.

Amid the rising angst, many of the top professionals in the field will convene in San Francisco on Monday for the best-known U.S. security industry conference, named after host company and EMC Corp unit RSA.

Several experts said they were convinced that companies are spending money on the wrong stuff, such as antivirus subscriptions that cannot recognize new or targeted attacks.

RSA Executive Chairman Art Coviello and Francis deSouza, head of products at top vendor Symantec Corp, both said they will give keynote speeches calling for a focus on more sophisticated analytical tools that look for unusual behavior on the network — which sounds expensive.

Others urge a more basic approach of limiting users' computer privileges, rapidly installing software updates, and allowing only trusted programs to function.

Some security companies are starting over with new designs, such as forcing all of their customers' programs to run on walled-off virtual machines.

With such divergent views, so much money at stake, and so many problems, there are perhaps just two areas of agreement.

Most people in the industry and government believe things will get worse. Coviello, for his part, predicted that a first-of-its kind - but relatively simple - virus that deleted all data on tens of thousands of PCs at Saudi Arabia's national oil company last year is a harbinger of what will come.

And most say that the increased mainstream attention on cyber security, even if it fixes uncomfortably on the industry's failings and tenacious adversaries, will help drive a desperately needed debate about what do to internationally and at home.

(Reporting by Joseph Menn in San Francisco; Additional reporting by Jim Finkle in Boston and Deborah Charles in Washington; Editing by Tiffany Wu and Jackie Frank)

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The Texas Tribune: Advocates Seek Mental Health Changes, Including Power to Detain

Matt Rainwaters for Texas Monthly

The Sherman grave of Andre Thomas’s victims.

SHERMAN — A worried call from his daughter’s boyfriend sent Paul Boren rushing to her apartment on the morning of March 27, 2004. He drove the eight blocks to her apartment, peering into his neighbors’ yards, searching for Andre Thomas, Laura Boren’s estranged husband.

Expanded coverage of Texas is produced by The Texas Tribune, a nonprofit news organization. To join the conversation about this article, go to texastribune.org.

For more articles on mental health and criminal justice in Texas, as well as a timeline of the Andre Thomas case: texastribune.org

Matt Rainwaters for Texas Monthly

Laura Boren

He drove past the brightly colored slides, swings and bouncy plastic animals in Fairview Park across the street from the apartment where Ms. Boren, 20, and her two children lived. He pulled into a parking spot below and immediately saw that her door was broken. As his heart raced, Mr. Boren, a white-haired giant of a man, bounded up the stairwell, calling out for his daughter.

He found her on the white carpet, smeared with blood, a gaping hole in her chest. Beside her left leg, a one-dollar bill was folded lengthwise, the radiating eye of the pyramid facing up. Mr. Boren knew she was gone.

In a panic, he rushed past the stuffed animals, dolls and plastic toys strewn along the hallway to the bedroom shared by his two grandchildren. The body of 13-month-old Leyha Hughes lay on the floor next to a blood-spattered doll nearly as big as she was.

Andre Boren, 4, lay on his back in his white children’s bed just above Leyha. He looked as if he could have been sleeping — a moment away from revealing the toothy grin that typically spread from one of his round cheeks to the other — except for the massive chest wound that matched the ones his father, Andre Thomas (the boy was also known as Andre Jr.), had inflicted on his mother and his half-sister as he tried to remove their hearts.

“You just can’t believe that it’s real,” said Sherry Boren, Laura Boren’s mother. “You’re hoping that it’s not, that it’s a dream or something, that you’re going to wake up at any minute.”

Mr. Thomas, who confessed to the murders of his wife, their son and her daughter by another man, was convicted in 2005 and sentenced to death at age 21. While awaiting trial in 2004, he gouged out one of his eyes, and in 2008 on death row, he removed the other and ate it.

At least twice in the three weeks before the crime, Mr. Thomas had sought mental health treatment, babbling illogically and threatening to commit suicide. On two occasions, staff members at the medical facilities were so worried that his psychosis made him a threat to himself or others that they sought emergency detention warrants for him.

Despite talk of suicide and bizarre biblical delusions, he was not detained for treatment. Mr. Thomas later told the police that he was convinced that Ms. Boren was the wicked Jezebel from the Bible, that his own son was the Antichrist and that Leyha was involved in an evil conspiracy with them.

He was on a mission from God, he said, to free their hearts of demons.

Hospitals do not have legal authority to detain people who voluntarily enter their facilities in search of mental health care but then decide to leave. It is one of many holes in the state’s nearly 30-year-old mental health code that advocates, police officers and judges say lawmakers need to fix. In a report last year, Texas Appleseed, a nonprofit advocacy organization, called on lawmakers to replace the existing code with one that reflects contemporary mental health needs.

“It was last fully revised in 1985, and clearly the mental health system has changed drastically since then,” said Susan Stone, a lawyer and psychiatrist who led the two-year Texas Appleseed project to study and recommend reforms to the code. Lawmakers have said that although the code may need to be revamped, it will not happen in this year’s legislative session. Such an undertaking requires legislative studies that have not been conducted. But advocates are urging legislators to make a few critical changes that they say could prevent tragedies, including giving hospitals the right to detain someone who is having a mental health crisis.

From the time Mr. Thomas was 10, he had told friends he heard demons in his head instructing him to do bad things. The cacophony drove him to attempt suicide repeatedly as an adolescent, according to court records. He drank and abused drugs to try to quiet the noise.

bgrissom@texastribune.org

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Major Banks Aid in Payday Loans Banned by States

Major banks have quickly become behind-the-scenes allies of Internet-based payday lenders that offer short-term loans with interest rates sometimes exceeding 500 percent.

With 15 states banning payday loans, a growing number of the lenders have set up online operations in more hospitable states or far-flung locales like Belize, Malta and the West Indies to more easily evade statewide caps on interest rates.

While the banks, which include giants like JPMorgan Chase, Bank of America and Wells Fargo, do not make the loans, they are a critical link for the lenders, enabling the lenders to withdraw payments automatically from borrowers’ bank accounts, even in states where the loans are banned entirely. In some cases, the banks allow lenders to tap checking accounts even after the customers have begged them to stop the withdrawals.

“Without the assistance of the banks in processing and sending electronic funds, these lenders simply couldn’t operate,” said Josh Zinner, co-director of the Neighborhood Economic Development Advocacy Project, which works with community groups in New York.

The banking industry says it is simply serving customers who have authorized the lenders to withdraw money from their accounts. “The industry is not in a position to monitor customer accounts to see where their payments are going,” said Virginia O’Neill, senior counsel with the American Bankers Association.

But state and federal officials are taking aim at the banks’ role at a time when authorities are increasing their efforts to clamp down on payday lending and its practice of providing quick money to borrowers who need cash.

The Federal Deposit Insurance Corporation and the Consumer Financial Protection Bureau are examining banks’ roles in the online loans, according to several people with direct knowledge of the matter. Benjamin M. Lawsky, who heads New York State’s Department of Financial Services, is investigating how banks enable the online lenders to skirt New York law and make loans to residents of the state, where interest rates are capped at 25 percent.

For the banks, it can be a lucrative partnership. At first blush, processing automatic withdrawals hardly seems like a source of profit. But many customers are already on shaky financial footing. The withdrawals often set off a cascade of fees from problems like overdrafts. Roughly 27 percent of payday loan borrowers say that the loans caused them to overdraw their accounts, according to a report released this month by the Pew Charitable Trusts. That fee income is coveted, given that financial regulations limiting fees on debit and credit cards have cost banks billions of dollars.

Some state and federal authorities say the banks’ role in enabling the lenders has frustrated government efforts to shield people from predatory loans — an issue that gained urgency after reckless mortgage lending helped precipitate the 2008 financial crisis.

Lawmakers, led by Senator Jeff Merkley, Democrat of Oregon, introduced a bill in July aimed at reining in the lenders, in part, by forcing them to abide by the laws of the state where the borrower lives, rather than where the lender is. The legislation, pending in Congress, would also allow borrowers to cancel automatic withdrawals more easily. “Technology has taken a lot of these scams online, and it’s time to crack down,” Mr. Merkley said in a statement when the bill was introduced.

While the loans are simple to obtain — some online lenders promise approval in minutes with no credit check — they are tough to get rid of. Customers who want to repay their loan in full typically must contact the online lender at least three days before the next withdrawal. Otherwise, the lender automatically renews the loans at least monthly and withdraws only the interest owed. Under federal law, customers are allowed to stop authorized withdrawals from their account. Still, some borrowers say their banks do not heed requests to stop the loans.

Ivy Brodsky, 37, thought she had figured out a way to stop six payday lenders from taking money from her account when she visited her Chase branch in Brighton Beach in Brooklyn in March to close it. But Chase kept the account open and between April and May, the six Internet lenders tried to withdraw money from Ms. Brodsky’s account 55 times, according to bank records reviewed by The New York Times. Chase charged her $1,523 in fees — a combination of 44 insufficient fund fees, extended overdraft fees and service fees.

For Subrina Baptiste, 33, an educational assistant in Brooklyn, the overdraft fees levied by Chase cannibalized her child support income. She said she applied for a $400 loan from Loanshoponline.com and a $700 loan from Advancemetoday.com in 2011. The loans, with annual interest rates of 730 percent and 584 percent respectively, skirt New York law.

Ms. Baptiste said she asked Chase to revoke the automatic withdrawals in October 2011, but was told that she had to ask the lenders instead. In one month, her bank records show, the lenders tried to take money from her account at least six times. Chase charged her $812 in fees and deducted over $600 from her child-support payments to cover them.

“I don’t understand why my own bank just wouldn’t listen to me,” Ms. Baptiste said, adding that Chase ultimately closed her account last January, three months after she asked.

A spokeswoman for Bank of America said the bank always honored requests to stop automatic withdrawals. Wells Fargo declined to comment. Kristin Lemkau, a spokeswoman for Chase, said: “We are working with the customers to resolve these cases.” Online lenders say they work to abide by state laws.

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Emory University President Revives Racial Concerns

ATLANTA — A reception Friday at Emory University to celebrate the work of the Southern Christian Leadership Conference in the years after the assassination of the Rev. Dr. Martin Luther King Jr. could have been more poorly timed, but not by much.

All week long, the president of Emory, James W. Wagner, had been trying to rewind a column that he had written for the university magazine. In it, he praised the 1787 three-fifths compromise, which allowed slaves to be counted as three-fifths of a person as a way to determine how much Congressional power Southern states would have, as an example of how polarized people can find common ground.

It was, he has since said, a clumsy and regrettable mistake.

A faculty group censured him last week for the remarks. And in a speech at Friday’s reception for the campus exhibition, “And the Struggle Continues: The Southern Christian Leadership Conference’s Fight for Social Change,” Dr. Wagner acknowledged both the nation’s ongoing education in race relations and his own.

“I know that I personally have a long way to go,” he said.

His article has been seized upon by students and faculty who say it was yet one more example of insensitivity from the Emory administration, which in September announced sweeping cuts that some say unfairly targeted some programs popular with minorities.

About 45 protesting students showed up at the reception, silently holding signs that read “This is 5/5 outrageous” and “Shame on James” as Dr. Wagner; Representative John Lewis of Georgia, a veteran of the civil rights movement; and leaders of the S.C.L.C. spoke about the fight for racial equality.

Whether the cuts, which include the elimination of physical education, visual arts, journalism, and graduate programs in economics and Spanish, disproportionately affect racial minorities is in dispute at the university, whose student body is 31 percent minority.

Certain programs that focused on or made recruiting minorities a priority have been shifted to other departments or eliminated, but university officials say the numbers are not as drastic as protesters believe.

Savings from the reorganization will be reinvested in other departments, including neurosciences, studies of contemporary China, and new media studies.

Such academic realignment is starting to happen at liberal arts colleges around the country, said Phil Kleweno, a consultant at Bain & Company who specializes in higher education.

“Not every school can excel in every subject,” he said. “Given where we are financially, these are wise decisions for many universities to make.”

In an interview Friday, Dr. Wagner said neither the cuts nor his self-described gaffe in Emory Magazine was intended to hurt what he described as a vibrant multicultural environment at the college.

The president’s misstep was only the latest incident in what one Emory administrator called “quite a challenging year” for the private university, which some call the Harvard of the South. (Emory boosters prefer to call Harvard University the Emory of the North.)

Although still the 20th best university in the nation in U.S. News and World Report’s latest ranking, Emory admitted in August that it had intentionally sent incorrect test scores to the magazine and the Department of Education for more than a decade.

The university has also grappled over whether to allow Chick-fil-A, whose conservative Christian owners have donated large sums of money to organizations opposed to gay marriage, to serve food on campus.

And in October, Dr. Wagner officially apologized to Jewish dental students who had either been failed, harassed or both under John E. Buhler’s reign as dean of the dental school from 1948 to 1961.

Many had seen the apology for that chapter in Emory’s history, when as many as 65 percent of Jewish students had to redo coursework or were failed, as a forward-thinking and healing move in keeping with the culture of the university, which has devoted years to studying its own racial history, both the good and the bad.

The school, which is 177 years old, was named for John Emory, a slave owner. Although many of its leaders favored segregated education, the school decided in 1962to sue the state for the right to enroll students regardless of race.

More recently, the school has dealt with a fraternity that flew a Confederate flag and an anthropology professor who used a racial epithet in class, but it also houses significant collections of African-American history and literature, including what is arguably the nation’s most complete database documenting American slave trade routes.

“Emory is a community that airs its laundry,” Dr. Wagner said, calling that a strength and a demonstration of its ability to evolve with its student body.

“We’ve had several wounds this year,” he said. “This one is a particularly painful wound for me because it was self-inflicted.”

Jovonna Jones, 19, the president of the Black Student Alliance at Emory, said she forgave Dr. Wagner for his transgression.

“As an African-American woman who has gone to predominately white institutions since middle school, I’ve had lots of incidents like this,” she said. “It’s hard to be shocked any more.”

People keep asking her if she thinks the university president is a racist, Ms. Jones said.

“I don’t think that’s the real question,” she said. “The important question is: What does it mean to embrace and value a diverse student body? What are the values of the school?”

Leslie Harris, an Emory history professor and the director of a series of campus events that for five years examined issues of race at Emory, said she was more troubled by the intellectual holes in Dr. Wagner’s argument.

In his column, Dr. Wagner used the Congressional fight over the national debt to muse on the importance of compromise, which he called a tool for noble achievement.

“The constitutional compromise about slavery, for instance, facilitated the achievement of what both sides of the debate really aspired to — a new nation,” he wrote.

That is a deep misunderstanding of history, said Dr. Harris.

“The three-fifths compromise is one of the greatest failed compromises in U.S. history,” she said. “Its goal was to keep the union together, but the Civil War broke out anyway.”

To members of the S.C.L.C., whose records are housed in Emory’s Manuscript, Archives, and Rare Book Library, the protesters at the reception were a welcome sign.

“I love it,” said Brenda Davenport, once the national volunteer and youth organizer for the S.C.L.C. “Where else would you want protesters to show up but at something that is about the value of protesting?”

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Einhorn scores legal victory versus Apple in cash scuffle

NEW YORK (Reuters) - A U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with Apple Inc on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.

U.S. District Judge Richard Sullivan in Manhattan granted a motion by Einhorn's Greenlight Capital for a preliminary injunction stopping a vote on that proposal, scheduled for the company's February 27 stockholders' meeting.

The decision could hand Einhorn more leverage as he pursues his pitch for Apple to issue what he has called the "iPref": preferred stock with a perpetual dividend that he contends would reward investors and help boost the company's share price.

Greenlight sued Apple on February 7 as part of a broader pitch to unlock more of its $137 billion in cash. The hedge fund manager has lobbied Apple to issue preferred stock with a perpetual 4 percent dividend, and on Thursday made a direct appeal to shareholders on a teleconference.

Apple Chief Executive Tim Cook last week dismissed the lawsuit as a "silly sideshow."

The lawsuit itself challenged a measure called Proposal No. 2 that Apple put forward, which would eliminate its power to issue preferred shares without a shareholder vote.

At issue is Apple's "bundling" of that measure with two other unrelated matters into a single proxy proposal.

Greenlight said it supported two of the proposed amendments, but not the one on preferred shares.

In his ruling, Sullivan said Greenlight and another investor who also sued Apple "are likely to succeed on the merits and face irreparable harm if the vote on Proposal No. 2 is permitted to proceed."

"We are disappointed with the court's ruling. Proposal No. 2 is part of our efforts to further enhance corporate governance and serve our shareholders' best interests," Apple spokesman Steve Dowling said. "Unfortunately, due to today's decision, shareholders will not be able to vote on Proposal No. 2 at our annual meeting next week."

A spokesman for Greenlight called the ruling a "significant win for all Apple shareholders and for good corporate governance."

But not all shareholders were happy. California pension fund Calpers, a major Apple investor and public supporter of Apple's proposal, said implementation of "majority voting and shareholder approval for the issuance of new stock - preferred or otherwise - is worth waiting for."

"We encourage Apple to reintroduce these measures as soon as is practical so that all investors can be heard," Anne Simpson, Calpers' director of global governance, said in a statement.

BUNDLES

The ruling could be a warning for other companies when issuing proxy proposals, said James Cox, a professor at Duke University School of Law.

"It's going to make managers reluctant to bundle things together, because you're never going to know when you send them out if there's an Einhorn out there," he said.

The lawsuit was centered on a narrow issue of whether Apple violated U.S. Securities and Exchange Commission rules by "bundling" the preferred shares item with two other unrelated matters into one proxy proposal.

Greenlight's lawyers contended the SEC rules were intended to protect shareholders from being forced to vote for a proxy proposal involving materially different issues that the investors might not entirely support.

Apple had argued Proposal No. 2, which only dealt with amendments to its charter, constitute a single matter and wasn't bundled. Sullivan called the company's arguments "unavailing."

"Given the language and purpose of the rules, it is plain to the Court that Proposal No. 2 impermissibly bundles 'separate matters' for shareholder consideration," Sullivan wrote.

Judge Sullivan also found that Greenlight would be irreparably harmed without the injunction, since it would be forced to vote against its own interests. Denying Greenlight's motion would prevent it and other investors from exercising their rights to a fair vote, Sullivan said.

Sullivan separately declined to block a vote from going forward on a separate proxy proposal, Proposal No. 4, which sought an advisory "say on pay" vote on Apple executives' compensation.

The proposal had been challenged by investor Brian Gralnick of Pennsylvania, who contends Apple did not disclose enough details about how it made its compensation decisions.

Sullivan rejected that argument, saying Apple's disclosures were "plainly sufficient under SEC rules."

Arnold Gershon, a lawyer for Gralnick at Barrack, Rodos & Bacine, said he was "very pleased" with Sullivan's decision to the extent it enjoined the Proposal No. 2 vote, though said he would have to decide what to do next with regard to the say-on-pay proposal.

Sullivan directed the parties to submit a joint letter by March 1 outlining the next contemplated steps in this case.

Apple shares closed up 1.1 percent at $450.81 on Friday.

The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.

(Reporting by Nate Raymond in New York; Additional reporting by Poornima Gupta in San Francisco; Editing by Martha Graybow, Gary Hill, Leslie Adler, Carol Bishopric and Lisa Shumaker)

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Oscars expand social media outreach for 85th show

LOS ANGELES (AP) — The Academy of Motion Picture Arts and Sciences is encouraging celebrities to tweet during the Oscars.

The film organization has expanded its digital outreach for the 85th Academy Awards with a new feature that lets stars to snap photos of themselves backstage during Sunday's ceremony and instantly post them online.

What Twitter calls a "Magic Mirror" will take photo-booth-style pictures of participating stars in the green room and send them out on the academy's official Twitter account. Organizers expect multiple celebrity mash-ups.

The backstage green room is a private place for stars to hang out before taking the stage and is typically closed to press and photographers.

The Magic Mirror is "giving access to fans at home a part of the show they never got to experience before," Twitter spokeswoman Elaine Filadelfo said Friday.

A new video-on-demand/instant replay feature also being introduced Sunday will allow Oscar fans to view show highlights online moments after they happen and share them with friends on Twitter and Facebook. Dozens of clips from the red carpet and the awards telecast will be available on the official Oscar website beyond Sunday's ceremony.

Oscar.com also offers other behind-the-scenes interactive features, including various backstage camera perspectives and a new live blog that aggregates the show's presence across social media. It will track the traffic on whatever makes a splash, like Angelina Jolie's right leg did last year.

The academy wants to make its second-screen experience just as rich as its primary one.

"Social media is now mainstream," said Christina Kounelias, chief marketing officer for the academy.

"We're not doing social media to reach out to young kids," said the academy's digital media director, Josh Spector. "We're doing it to connect with all Oscar fans."

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Drone Pilots Found to Get Stress Disorders Much as Those in Combat Do

U.S. Air Force/Master Sgt. Steve Horton

Capt. Richard Koll, left, and Airman First Class Mike Eulo monitored a drone aircraft after launching it in Iraq.

The study affirms a growing body of research finding health hazards even for those piloting machines from bases far from actual combat zones.

“Though it might be thousands of miles from the battlefield, this work still involves tough stressors and has tough consequences for those crews,” said Peter W. Singer, a scholar at the Brookings Institution who has written extensively about drones. He was not involved in the new research.

That study, by the Armed Forces Health Surveillance Center, which analyzes health trends among military personnel, did not try to explain the sources of mental health problems among drone pilots.

But Air Force officials and independent experts have suggested several potential causes, among them witnessing combat violence on live video feeds, working in isolation or under inflexible shift hours, juggling the simultaneous demands of home life with combat operations and dealing with intense stress because of crew shortages.

“Remotely piloted aircraft pilots may stare at the same piece of ground for days,” said Jean Lin Otto, an epidemiologist who was a co-author of the study. “They witness the carnage. Manned aircraft pilots don’t do that. They get out of there as soon as possible.”

Dr. Otto said she had begun the study expecting that drone pilots would actually have a higher rate of mental health problems because of the unique pressures of their job.

Since 2008, the number of pilots of remotely piloted aircraft — the Air Force’s preferred term for drones — has grown fourfold, to nearly 1,300. The Air Force is now training more pilots for its drones than for its fighter jets and bombers combined. And by 2015, it expects to have more drone pilots than bomber pilots, although fighter pilots will remain a larger group.

Those figures do not include drones operated by the C.I.A. in counterterrorism operations over Pakistan, Yemen and other countries.

The Pentagon has begun taking steps to keep pace with the rapid expansion of drone operations. It recently created a new medal to honor troops involved in both drone warfare and cyberwarfare. And the Air Force has expanded access to chaplains and therapists for drone operators, said Col. William M. Tart, who commanded remotely piloted aircraft crews at Creech Air Force Base in Nevada.

The Air Force has also conducted research into the health issues of drone crew members. In a 2011 survey of nearly 840 drone operators, it found that 46 percent of Reaper and Predator pilots, and 48 percent of Global Hawk sensor operators, reported “high operational stress.” Those crews cited long hours and frequent shift changes as major causes.

That study found the stress among drone operators to be much higher than that reported by Air Force members in logistics or support jobs. But it did not compare the stress levels of the drone operators with those of traditional pilots.

The new study looked at the electronic health records of 709 drone pilots and 5,256 manned aircraft pilots between October 2003 and December 2011. Those records included information about clinical diagnoses by medical professionals and not just self-reported symptoms.

After analyzing diagnosis and treatment records, the researchers initially found that the drone pilots had higher incidence rates for 12 conditions, including anxiety disorder, depressive disorder, post-traumatic stress disorder, substance abuse and suicidal ideation.

But after the data were adjusted for age, number of deployments, time in service and history of previous mental health problems, the rates were similar, said Dr. Otto, who was scheduled to present her findings in Arizona on Saturday at a conference of the American College of Preventive Medicine.

The study also found that the incidence rates of mental heath problems among drone pilots spiked in 2009. Dr. Otto speculated that the increase might have been the result of intense pressure on pilots during the Iraq surge in the preceding years.

The study found that pilots of both manned and unmanned aircraft had lower rates of mental health problems than other Air Force personnel. But Dr. Otto conceded that her study might underestimate problems among both manned and unmanned aircraft pilots, who may feel pressure not to report mental health symptoms to doctors out of fears that they will be grounded.

She said she planned to conduct two follow-up studies: one that tries to compensate for possible underreporting of mental health problems by pilots and another that analyzes mental health issues among sensor operators, who control drone cameras while sitting next to the pilots.

“The increasing use of remotely piloted aircraft for war fighting as well as humanitarian relief should prompt increased surveillance,” she said.

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Many States Say Cuts Would Burden Fragile Recovery

States are increasingly alarmed that they could become collateral damage in Washington’s latest fiscal battle, fearing that the impasse could saddle them with across-the-board spending cuts that threaten to slow their fragile recoveries or thrust them back into recession.

Some states, like Maryland and Virginia, are vulnerable because their economies are heavily dependent on federal workers, federal contracts and military spending, which will face steep reductions if Congress allows the automatic cuts, known as sequestration, to begin next Friday. Others, including Illinois and South Dakota, are at risk because of their reliance on the types of federal grants that are scheduled to be cut. And many states simply fear that a heavy dose of federal austerity could weaken their economies, costing them jobs and much-needed tax revenue.

So as state officials begin to draw up their budgets for next year, some say that the biggest risk they see is not the weak housing market or the troubled European economy but the federal government. While the threat of big federal cuts to states has become something of a semiannual occurrence in recent years, state officials said in interviews that they fear that this time the federal government might not be crying wolf — and their hopes are dimming that a deal will be struck in Washington in time to avert the cuts.

The impact would be widespread as the cuts ripple across the nation over the next year.

Texas expects to see its education aid slashed hundreds of millions of dollars, which could force local school districts to fire teachers, if the cuts are not averted. Michigan officials say they are in no position to replace the lost federal dollars with state dollars, but worry about cuts to federal programs like the one that helps people heat their homes. Maryland is bracing not only for a blow to its economy, which depends on federal workers and contractors and the many private businesses that support them, but also for cuts in federal aid for schools, Head Start programs, a nutrition program for pregnant women, mothers and children, and job training programs, among others.

Gov. Bob McDonnell of Virginia, a Republican, warned in a letter to President Obama on Monday that the automatic spending cuts would have a “potentially devastating impact” and could force Virginia and other states into a recession, noting that the planned cuts to military spending would be especially damaging to areas like Hampton Roads that have a big Navy presence. And he noted that the whole idea of the proposed cuts was that they were supposed to be so unpalatable that they would force officials in Washington to come up with a compromise.

“As we all know, the defense, and other, cuts in the sequester were designed to be a hammer, not a real policy,” Mr. McDonnell wrote. “Unfortunately, inaction by you and Congress now leaves states and localities to adjust to the looming threat of this haphazard idea.”

The looming cuts come just as many states feel they are turning the corner after the prolonged slump caused by the recession. Gov. Martin O’Malley of Maryland, a Democrat, said he was moving to increase the state’s cash reserves and rainy day funds as a hedge against federal cuts.

“I’d rather be spending those dollars on things that improve our business climate, that accelerate our recovery, that get more people back to work, or on needed infrastructure — transportation, roads, bridges and the like,” he said, adding that Maryland has eliminated 5,600 positions in recent years and that its government was smaller, on a per capita basis, than it had been in four decades. “But I can’t do that. I can’t responsibly do that as long as I have this hara-kiri Congress threatening to drive a long knife through our recovery.”

Federal spending on salaries, wages and procurement makes up close to 20 percent of the economies of Maryland and Virginia, according to an analysis by the Pew Center on the States.

But states are in a delicate position. While they fear the impact of the automatic cuts, they also fear that any deal to avert them might be even worse for their bottom lines. That is because many of the planned cuts would go to military spending and not just domestic programs, and some of the most important federal programs for states, including Medicaid and federal highway funds, would be exempt from the cuts.

States will see a reduction of $5.8 billion this year in the federal grant programs subject to the automatic cuts, according to an analysis by Federal Funds Information for States, a group created by the National Governors Association and the National Conference of State Legislatures that tracks the impact of federal actions on states. California, New York and Texas stand to lose the most money from the automatic cuts, and Puerto Rico, which is already facing serious fiscal distress, is threatened with the loss of more than $126 million in federal grant money, the analysis found.

Even with the automatic cuts, the analysis found, states are still expected to get more federal aid over all this year than they did last year, because of growth in some of the biggest programs that are exempt from the cuts, including Medicaid.

But the cuts still pose a real risk to states, officials said. State budget officials from around the country held a conference call last week to discuss the threatened cuts. “In almost every case the folks at the state level, the budget offices, are pretty much telling the agencies and departments that they’re not going to backfill — they’re not going to make up for the budget cuts,” said Scott D. Pattison, the executive director of the National Association of State Budget Officers, which arranged the call. “They don’t have enough state funds to make up for federal cuts.”

The cuts would not hit all states equally, the Pew Center on the States found. While the federal grants subject to the cuts make up more than 10 percent of South Dakota’s revenue, it found, they make up less than 5 percent of Delaware’s revenue.

Many state officials find themselves frustrated year after year by the uncertainty of what they can expect from Washington, which provides states with roughly a third of their revenues. There were threats of cuts when Congress balked at raising the debt limit in 2011, when a so-called super-committee tried and failed to reach a budget deal, and late last year when the nation faced the “fiscal cliff.”

John E. Nixon, the director of Michigan’s budget office, said that all the uncertainty made the state’s planning more difficult. “If it’s going to happen,” he said, “at some point we need to rip off the Band-Aid.”

Fernanda Santos contributed reporting.

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