DealBook: Ex-Trader Charged in $276 Million Insider Scheme

Over the last half-decade, as federal authorities secured dozens of insider trading convictions against hedge fund traders, they have tried doggedly to build a case against one of Wall Street’s most influential players: the billionaire stock picker Steven A. Cohen.

On Tuesday, the government appeared to inch closer to that goal. Prosecutors brought charges against a former portfolio manager at the hedge fund SAC Capital Advisors in a case that for the first time directly involves Mr. Cohen, the fund’s founder.

Mathew Martoma, a former portfolio manager at CR Intrinsic, a unit of SAC, was charged with making more than $276 million in a combination of illegal profits and avoided losses by obtaining secret information from a doctor about clinical trials for an Alzheimer’s drug being developed by the companies Elan and Wyeth.

The case is “the most lucrative insider trading scheme ever charged,” said Preet Bharara, the United States attorney in Manhattan, who brought the charges in Federal District Court in Manhattan.

It also draws in Mr. Cohen, whose fund has been in the cross hairs of government investigators since the crackdown on insider trading began. Though not charged or mentioned by name, Mr. Cohen is referred to repeatedly in the government’s court filings as either “Portfolio Manager A” or the “owner” of the funds involved. People briefed on the case confirmed that the reference was to Mr. Cohen.

Mr. Martoma worked closely with Mr. Cohen in buying and selling large blocks of Elan and Wyeth shares, according to a lawsuit also filed on Tuesday by the Securities and Exchange Commission.

The government does not say that Mr. Cohen — who has not been charged in the case — knew that Mr. Martoma had confidential information about the companies’ Alzheimer drug when he bought and sold the stocks.

“Mr. Cohen and SAC are confident that they have acted appropriately and will continue to cooperate with the government’s inquiry,” said Jonathan Gasthalter, a SAC spokesman.

From the middle of an expansive trading floor in SAC’s Stamford, Conn., headquarters, Mr. Cohen, 56, oversees a fund that manages about $13 billion and, including borrowing from banks, possesses about $39 billion in total buying power. The fund, which has about 900 employees, has generated some of the best investment returns on Wall Street, averaging about 30 percent over the last two decades.

Though the case against Mr. Martoma is the first time the government has pointed to Mr. Cohen’s participation in a trade that may have been improper, it is the latest in a spate of insider trading prosecutions of former SAC employees. At least seven former SAC employees have been tied to the government’s multiyear investigation; three of them have pleaded to insider trading while working for Mr. Cohen.

Previous cases involving SAC have highlighted the firm’s unusual structure: traders are allocated money and invest on their own with little direct input from Mr. Cohen. But in this case, Mr. Cohen is said to have had numerous contacts with Mr. Martoma and appeared to collaborate closely with him.

“The law of averages would tell you that all of these instances at one firm are not coincidences,” said Mark Zauderer, a securities lawyer in New York. “People take their cues from the top, and these cases must reflect a culture there.”

F.B.I. agents arrested Mr. Martoma, 38, early Tuesday morning at his home in Boca Raton, Fla. He was released on bail after making an appearance in Federal District Court in West Palm Beach. Mr. Martoma, who has been unemployed since leaving SAC in 2010, is expected to appear in federal court in Manhattan on Monday and enter a plea.

“Mathew Martoma was an exceptional portfolio manager who succeeded through hard work and the dogged pursuit of information in the public domain,” said his lawyer, Charles A. Stillman. “What happened today is only the beginning of a process that we are confident will lead to Mr. Martoma’s full exoneration.”

Also accused in the scheme by the Securities Exchange Commission on Tuesday was Sidney Gilman, a neurology professor at the University of Michigan. The S.E.C. said Dr. Gilman, 80, an Alzheimer’s expert who helped oversee the clinical trials for the drug, gave Mr. Martoma the confidential information.

Dr. Gilman is cooperating with the government and has entered into a nonprosecution with the United States attorney’s office in Manhattan, meaning that criminal charges will not be brought against him. Marc Mukasey, a lawyer for Dr. Gilman, said that he expected the S.E.C.’s case to be resolved shortly.

Mr. Martoma met Dr. Gilman through the Gerson Lehrman Group, a so-called expert network firm based in New York. Once an obscure pocket of Wall Street, expert network firms became popular among the hedge fund set in the last decade as a way to gain an investment edge. The services linked traders to specialists and consultants in various industries.

But these firms came under scrutiny after the government brought more than a dozen insider trading cases involving these expert networks. In some cases, hedge fund managers paid outside consultants handsome fees for providing confidential information about publicly traded companies. In others, the government charged executives at the expert network firms with knowingly facilitating the exchange of illegal stock tips.

A spokesman for Gerson Lehrman declined to comment. The government’s complaint details how Dr. Gilman hid his communications about the trial from the expert network firm.

Dr. Gilman’s consulting work for Mr. Martoma earned him about $108,000, according to court filings. Based in part on Dr. Gilman’s leaks about positive developments related to the clinical trials of a new Alzheimer’s drug, SAC accumulated a roughly $700 million position in the stocks of Wyeth and Elan, according to the government.

The S.E.C. said that the fund’s owner, Mr. Cohen, took a large position in Wyeth and Elan in his personal portfolio based on Mr. Martoma’s recommendation. Mr. Cohen maintained his holdings even though there was significant debate about the wisdom of such a large position in the companies, the government said.

But in July 2008, as the trials neared completion, Dr. Gilman told Mr. Martoma that patients were experiencing serious side effects, prosecutors say. Afterward, Mr. Martoma e-mailed Mr. Cohen, telling him “it’s important” that they speak. They spoke on the phone for nearly 20 minutes, the government says, and Mr. Martoma told his boss that he was no longer “comfortable” with the investments.

The following day, SAC reversed course. Mr. Cohen’s head trader sold the firm’s entire inventory of roughly 10.5 million shares of Elan and about seven million shares of Wyeth, the government said. Once it had dumped the shares, SAC built a short position in the two stocks, betting their value would drop.

According to the S.E.C., the trader, Mr. Cohen and Mr. Martoma kept the sales confidential. The trade, wrote the head trader in an e-mail to Mr. Cohen, “was executed quietly and efficiently over a four-day period through algos and darkpools” — referring to trades using algorithms and to trading platforms that do not have the same reporting requirements as the stock exchanges — “and booked into two firm accounts that have very limited viewing access.”

After the companies announced the results of the trials, Elan’s stock fell about 42 percent and Wyeth’s about 12 percent.

The trading allowed SAC to avoid about $194 million in losses and earn about $83 million in profits on Elan and Wyeth, according to prosecutors.

At the end of 2008, Mr. Martoma received a bonus of about $9.3 million, the S.E.C. said. Mr. Martoma’s stock picks were less successful in 2009 and 2010, and he received no bonuses then.

According to the government, in 2010 an SAC executive suggested in an e-mail that the firm let Mr. Martoma go, describing him as a “one-trick pony.”

SAC CAPITAL UNDER A MICROSCOPE The firm has been under a cloud since a former employee, Richard Choo-Beng Lee, pleaded guilty in 2009 to insider trading and began helping the government in its investigation. The crimes he confessed to were committed after he left SAC, but he agreed to provide information about his five years at the firm, which ended in 2004.

NAMES	THE CASES
Jonathan Hollander	The former analyst paid more than $220,000 to settle civil charges brought by the Securities and Exchange Commission accusing him of trading in his personal account on confidential information about the 2006 takeover of the Albertsons grocery store chain.
Jon Horvath and Michael Steinberg	Mr. Horvath, right, a former technology industry analyst, pleaded guilty in September to participating in a conspiracy that illegally traded in the shares of Dell computer. His boss, the former portfolio manager Mr. Steinberg, has been named as an unindicted co-conspirator but has not been charged in the case. Federal prosecutors contend they were part of a seven-person conspiracy — a “circle of friends” — that earned about $62 million in illegal gains trading on secret tips from executives at publicly traded technology companies.
Donald Longueuil and Noah Freeman	The two former portfolio managers admitted in 2011 to trading on illegal tips about publicly traded technology companies. Mr. Longueuil, right, was swept up in a crackdown on so-called expert networks. He is one of roughly a dozen implicated in the case. Mr. Longueuil is serving a two-and-a-half-year jail term at a federal prison in Otisville, N.Y.; Mr. Freeman, who is cooperating with prosecutors, has yet to be sentenced.
Mathew Martoma	The former trader at CR Intrinsic, a unit of the hedge fund, was charged with making about $276 million in combined profits and avoided losses by obtaining confidential information about a drug trial for an Alzheimer’s drug developed by the pharmaceutical companies Elan and Wyeth.

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Hamas Strengthens as Palestinian Authority Weakens

RAMALLAH, West Bank — In the daily demonstrations here of solidarity with Gaza, a mix of sympathy and anguish, there is something else: growing identification with the Islamist fighters of Hamas and derision for the Palestinian Authority, which Washington considers the only viable partner for peace with Israel.

“Strike a blow on Tel Aviv!” proclaim the lyrics of a new hit song blasting from shops and speakers at Monday’s demonstration, in a reference to Hamas rockets that made it nearly to Israel’s economic and cultural capital. “Don’t let the Zionists sleep! We don’t want a truce or a solution! Oh Palestinians, you can be proud!”

Pop songs everywhere are filled with bravado and aggression. But this one reflects a widespread sentiment that does not augur well for President Mahmoud Abbas and his Palestinian Authority, which is rapidly losing credibility, even relevance. The Gaza truce talks in Cairo, involving Egypt, Turkey and Qatar, offer a telling tableau. The Palestinian leader seen there is not Mr. Abbas, but Khaled Meshal, the leader of the militant group Hamas, who seeks to speak for all Palestinians as his ideological brothers in the Muslim Brotherhood rise to power around the region.

Israel is also threatening Mr. Abbas, even hinting that it may give up on him, as he prepares to go to the United Nations General Assembly on Nov. 29 to try to upgrade the Palestinian status to that of a nonmember state. The Israelis consider this step an act of aggression, and even some Palestinians say it is somewhat beside the point at this stage.

“His people are being killed in Gaza, and he is sitting on his comfortable chair in Ramallah,” lamented Firas Katash, 20, a student who took part in the Ramallah demonstration.

For the United States, as for other countries hoping to promote a two-state solution to this century-old conflict, a more radicalized West Bank with a discredited Palestinian Authority would mean greater insecurity for Israel and increased opportunity for anti-Western forces to take root in a region where Islamism is on the rise.

Since Hamas, which won parliamentary elections in 2006, threw the Fatah-controlled authority out of Gaza a year later, Mr. Abbas has not set foot there. Yet he will be asking the world to recognize the two increasingly distinct entities as a unified state.

Manar Wadi, who works in an office in Ramallah, put the issue this way: “What is happening in Gaza makes the Palestinian Authority left behind and isolated. Now we see the other face of Hamas, and its popularity is rising. It makes us feel that the Palestinian Authority doesn’t offer a path to the future.”

In Cairo on Monday, Mr. Meshal seemed defiant and confident in his new role, daring the Israelis to invade Gaza as a sixth day of Israeli aerial assaults brought the death toll there to more than 100 people, many of them militants of Hamas and its affiliates. Rockets launched from Gaza hit southern Israel, causing some damage and panic, but no casualties, leaving the death toll there at three.

“Whoever started the war must end it,” Mr. Meshal said at a news conference. “If Israel wants a cease-fire brokered through Egypt, then that is possible. Escalation is also possible.”

Officials in the authority have been holding leadership meetings, staying in close touch with the talks in Cairo and issuing statements of solidarity. They have also sent a small medical delegation to Gaza and argue that there is a new opportunity to forge unity between the two feuding movements. But they are acutely aware of their problem.

“The most dangerous thing is the fact that what we could not do in negotiations, Hamas did with one rocket,” one official said, speaking on the condition of anonymity. “The people had such excitement seeing the occupiers run in panic. It’s a very dangerous message.”

Mr. Abbas, whose popularity has been on the decline as the Palestinian Authority faces economic difficulty and growing Israeli settlements, also ran into trouble not long before the Gaza fighting began when he seemed to give up on the Palestinian demand of a right of return to what is now Israel.

Many Palestinians believe that Israel launched its latest operation in Gaza to block the Palestinian Authority’s United Nations plans by embarrassing it. Israeli officials say that is ridiculous: the operation’s purpose is to stop the growing number of rockets being fired at their communities, and Israelis interrupted their deliberations over the United Nations bid to wage the military campaign.

But Israel says anything that does not involve direct negotiations is a waste of time. The government of Prime Minister Benjamin Netanyahu has repeatedly threatened to take severe retaliatory steps against the Palestinian Authority, including cutting off badly needed tax receipts to Palestinian coffers, should Mr. Abbas go ahead at the United Nations.

In a speech here on Sunday night at a Palestinian leadership meeting, Mr. Abbas repeated his determination to go to New York and ask for a change in status to that of nonmember state. He has chosen the symbolically significant date of Nov. 29, when the General Assembly voted in 1947 to divide this land into two states, one Jewish and the other Palestinian Arab.

The United States has asked Mr. Abbas not to do so, but instead to resume direct negotiations with Israel, which have essentially been frozen since 2008.

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Review: Wii U Filled With Potential

The Nintendo Wii turns six this month, making the video game system past its prime in console years. Nintendo and third-party developers have been slowly grinding Wii titles to a halt as all prepare for its successor, the $ 300 Wii U (say it with us, We-you), to launch today.

WATCH: Wii U Video Review

The latest Nintendo comes with a shiny new console and a shiny new GamePad tablet controller. (They may actually be a little too shiny, as the system and controller easily pick up smudges and fingerprints.) A mess of long cords also come with the system, including the Wii U’s power cord, the GamePad’s charger, the HDMI cord and the motion sensor’s long, thin cord.

The box is packed with contents, but also high expectations.

The Console
The GamePad controller, which we will get to in a second, is one of the biggest changes to the system, but there are a lot of other changes inside the actual console. With an IBM multi-core processor, 2GB of RAM, and an AMD Radeon graphics chip, a Nintendo console is capable for the first time of pushing along full HD, 1080p games on your HDTV. It connects to your HDTV via that aforementioned HDMI cord, which is kindly included in the box.

At least for a brief period we have a Nintendo with better internal organs than the Xbox 360 and Sony PlayStation, though not many expect that to last.

Of note, the graphics processor on the Wii U is far more advanced than its competition, but the computer processor has been hinted to be a little less powerful than both rivals. This means stronger graphics, but potential processing issues when more moving items are presented on screen.

The GamePad
Back to the main event — the Wii U’s GamePad controller. Nintendo’s latest toy takes the best aspects of the company’s top-selling handheld, the Nintendo DS, and has supersized them, putting a larger, 6.2-inch touchscreen in your hands. But that’s not all that is found in the controller. It also has a front-facing camera, stylus, dual analog sticks, an accelerometer and a gyroscope.

At 1.1 pounds the controller is easy to hold and very light. And while it is a bit wide, it is durable enough to avoid much damage when in the hands of an enraged 7-year-old. Yes, I slammed it on a carpeted floor a few times and it withstood the abuse.

There is only one GamePad included in the box and you can expect there to be fighting over it. At the moment, Nintendo isn’t selling GamePads separately, but that’s intentional; there are no games that support dual GamePad experiences at the moment.

Nintendo calls its one-pad approach “asymmetric gameplay,” where the person using the GamePad has a different role in how games are played, equivalent to being “it” in tag or the dungeon master in “Dungeons & Dragons.” For this role, what they see on the controller’s screen is sometimes completely different than what others see on the TV.

For instance, in “Nintendo Land‘s Animal Crossing: Sweet Day,” the person with the GamePad controls two characters while the person with the extra non-GamePad controller controls just one. The person using the GamePad sees their characters on the touchscreen, while the non-GamePad player sees theirs on the TV.

Nintendo is releasing a Pro controller with the Wii U for an extra $ 50. The controller looks very similar to the Xbox 360 controller, and while we do wish it was included for the $ 300 price, you don’t have to buy that controller if you want to add more players. That’s because your original Wii games and Wiimote controllers will work with the new system.

Nintendo sold 97 million Wii consoles in six years and plenty of Nintendo fans have stashes of iconic white wands sitting around the house. All those still in love with motion controls can rest easy, this move means all your past, present and future arm flailing will endure.

Word to the wise: if you haven’t already purchased WiiMotion Plus add-on accessories for your old Wiimotes, now is the time, they’re crucial for games like Zelda Battle Quest in “Nintendo Land.”

Since the Gamepad is wireless, it can be used when away from the TV, but not too far away. You can play a game on it while in another room in the house, but it needs to be in close proximity to the console. You’ll want to make sure you’re in close proximity to the charger, too. All that technology inside the Gamepad takes a hit on battery life; after four hours of continuous gameplay it begins to warn you of its need for juice.

The Games
In 2006, the Wii launched with “Wii Sports,” a game included in the box and built to demonstrate the capabilities of the system. “Wii Sports” was big on simplicity, utilizing just a few buttons and bit of stick waving, making it the ultimate casual gaming experience.

Today’s Wii U’s launch is complimented by “Nintendo Land,” a world that contains 12 mini-games in one. (It comes in the box with the $ 350 Deluxe Wii U version and costs $ 60 on its own.) Some games take advantage of the stylus while others require a mix of the analog sticks, motion capabilities, and the actual touchscreen. The variety is a great showcase but lacks the level of simplicity that made “Wii Sports” an instant hit.

If anything, the Wii U’s sampling of gameplay varieties will get you excited thinking what might be possible with the new hardware. Drawing with the stylus on your GamePad and seeing the end result on a TV screen is extremely satisfying. A possible “Mario Paint” meets “Draw Something” could be gigantic. My colleague Joanna Stern couldn’t get enough of flicking stars on the touch screen in “Takamaru’s Ninja Castle,” I could see a full game centered around that mechanic doing very well.

At launch, there are almost two-dozen titles with various degrees of GamePad integration, spanning almost every genre. It feels like there should be more that directly take advantage of the touchscreen, however. We will be reviewing these over the course of the week, but I will say the $ 60 New Super Mario Bros. U seems like a must-have, just to experience Mario in HD for the first time.

The Social and Media Capabilities
With the Wii U comes a broadening of the Nintendo Network, the structure that has allowed Nintendo 3DS players to compete with each other online. On the Nintendo Network, video chat is now available through the GamePad‘s front-facing camera.

Mii avatars are being more integrated than ever into games, you can expect to be the star of the game more often and to see your Miis interacting with those of your friends, sharing screenshots, messages and accomplishments.

Even with more social networking and revamped cooperative play, the focus of this system is bringing back single players and defining Nintendo as a brand for both social gatherings and “me time,” hence the “U” in Wii U. More “hardcore” single player games will be in the mix as well, reflected at launch with “Call of Duty: Black Ops 2″ and “Batman: Arkham City” availability.

Like the competing consoles, Nintendo is also making moves to bring media capabilities to the console with YouTube, Netflix, Hulu Plus, and Amazon Instant Video integration. Nintendo has also announced TVii, an interface that integrates with those Internet video services and your cable box, but it has been delayed until December.

The Bottom Line
On paper, the Wii U sounds like a simple win. Take Nintendo’s best-selling handheld, their best-selling system (Wii), the graphics of their competitors and mash that up with latest developments in tablet technology. And in many ways it is, combining the best of the last five years in an incredibly unique and well-designed package. That said, there’s a ways to go in terms of games that take advantage of the touchscreen, the GamePad’s battery life, and we really do wish another controller was included in the box.

Wii U has major potential and if Nintendo plays their cards right, the system can become a major player, especially once the media capabilities and game options are fully stocked. The second-generation Wii might not be as game-changing as the orginal, but it certainly is a lot of fun to play with.

Joanna Stern contributed to this review.

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Marlins salary dump to Toronto finalized

MIAMI (AP) — The Miami Marlins' latest payroll purge received final approval Monday from the commissioner's office, and as the team's top baseball executive began to discuss the deal during a conference call, a bad connection generated waves of reverberating noise that filled the phone line.

Nearly a week after the Marlins swung their widely ridiculed trade with Toronto, negative feedback keeps coming.

Commissioner Bud Selig approved the blockbuster deal, however, even though it made Marlins fans irate and made the team a nationwide punch line. The trade sends All-Star shortstop Jose Reyes to the Blue Jays along with pitchers Mark Buehrle and Josh Johnson, catcher John Buck and outfielder Emilio Bonifacio for seven players, none of whom has a big-money contract.

Miami received infielders Yunel Escobar and Adeiny Hechavarria, pitchers Henderson Alvarez, Anthony DeSclafani and Justin Nicolino, catcher Jeff Mathis and outfielder Jake Marisnick.

By swinging the deal only months after the Marlins moved into a new stadium built with taxpayer money, they pared from their books $146.5 million in payroll. That's their net savings after agreeing to send $8.5 million to the Blue Jays as part of the trade.

Marlins president of baseball operations Larry Beinfest said he understood why fans were mad, and confirmed the trade was necessary because owner Jeffrey Loria wanted to pare payroll. Beinfest also conceded the deal will make it harder for the team to recruit free agents in the future.

But Selig decided not to block it.

"This transaction, involving established major leaguers and highly regarded young players and prospects, represents the exercise of plausible baseball judgment on the part of both clubs (and) does not violate any express rule of Major League Baseball and does not otherwise warrant the exercise of any of my powers to prevent its completion," Selig said in a statement. "It is, of course, up to the clubs involved to make the case to their respective fans that this transaction makes sense and enhances the competitive position of each, now or in the future."

The players traded by the Marlins have combined guaranteed salaries of $163.75 million through 2018, including $96 million due Reyes.

"I understand the pause the fans have with the instability in our roster at a time when we were hoping to be very stable in the new stadium," Beinfest said. "It's not a lot of fun."

By contrast, the trade stamps the Blue Jays as contenders in the AL East. They haven't reached the playoffs since winning their second consecutive World Series in 1993.

Miami also finalized a deal with outfielder Juan Pierre, who agreed to a $1.6 million, one-year contract. That leaves the Marlins with an estimated opening-day payroll of $36 million for active players, which would be their lowest since 2008. In the latest figures, Oakland had the lowest payroll in the majors this year at $59.5 million.

While Beinfest said the Marlins acquired championship-caliber talent, fans believe Loria's goal was to increase his profits in the new ballpark rather than put increased revenue into the roster.

"We did receive a payroll range from ownership that we needed to achieve," Beinfest said. "With this transaction, we have achieved that payroll range."

The Marlins flopped as big spenders. They began the year with a franchise-record payroll of $112 million, then went 69-93, their worst record since 1999.

After sinking to last place by midseason, the Marlins traded former NL batting champion Hanley Ramirez, second baseman Omar Infante, right-hander Anibal Sanchez and closer Heath Bell.

"We've finished in last place the past two years, and that is unacceptable," Loria said in a statement. "It's incumbent on us to make the changes necessary to make us a winner again. It may not happen overnight. But with the players we acquired in the second half of last season, coupled with the infusion of players we are acquiring now, we will be returning to Marlins baseball: high energy and hungry."

Reyes, Buehrle and Bell signed multiyear deals as newcomers a year ago during an unprecedented Marlins spending spree, and Beinfest acknowledged other free agents might be now reluctant to sign with Miami.

"It'll be a factor," he said. "I don't think we're happy about this at all. I understand there may be some disdain in the marketplace. We won't know until we get into those negotiations with free agents. It's definitely not great for the club, and we're going to have to deal with it."

Miami's biggest remaining star, slugger Giancarlo Stanton, has been among those expressing anger about the trade. Beinfest said he hadn't talked with Stanton about the deal.

"I know this is an emotional time," Beinfest said. "I'm sure it has been tough for him. Our feeling was to maybe let the dust settle a little bit and then talk to Giancarlo. I hear the frustration. It's not unexpected. This has been a tough go, but we think it's best for us moving forward."

Players' union head Michael Weiner withheld comment, saying he was awaiting more input from Major League Baseball.

In January 2009, the union reached an agreement with MLB and the Marlins covering 2010-12 which Weiner said was a "response to our concerns that revenue sharing proceeds have not been used as required. As part of the deal, Weiner said the team planned to "use such proceeds to increase player payroll annually as they move toward the opening of their new ballpark."

Selig said he was sensitive to how Marlins fans reacted to the trade.

"Baseball is a social institution with important social responsibilities, and I fully understand that the Miami community has done its part to put the Marlins into a position to succeed with beautiful new Marlins Park," Selig said. "Going forward, I will continue to monitor this situation with the expectation that the Marlins will take into account the sentiments of their fans, who deserve the best efforts and considered judgment of their club. I have received assurances from the ownership of the Marlins that they share these beliefs and are fully committed to build a long-term winning team that their fans can be proud of."

NOTES: Pierre would earn a $25,000 bonus if he's an All-Star, $25,000 each for winning a Gold Glove or Silver Slugger, $50,000 if he's an LCS MVP, $100,000 if he's the World Series MVP and $100,000 if he's the league MVP.

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AP Sports Writer Ronald Blum in New York contributed to this report.

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Really?: The Claim: Eye Problems Can Cause Headaches in Children

Really?

Anahad O’Connor tackles health myths.

THE FACTS When a child complains of frequent headaches, many pediatricians order an eye exam. “In some pediatric ophthalmology practices, it’s a daily occurrence,” said Dr. Zachary Roth, a resident in ophthalmology at Albany Medical Center in New York.

Often, a child may experience headaches while reading or doing schoolwork, leading parents to think the child needs glasses. But are eye problems really a cause of childhood headaches?

In a recent study, Dr. Roth and his colleagues examined 158 children under age 18 who were referred to ophthalmologists for frequent headaches. Then, they evaluated the children’s medical records and looked at the results of earlier vision exams.

Ultimately, the researchers could not find any significant link between headaches and diagnoses of vision problems. In three-quarters of the subjects, the headaches went away over time, both in those who received new glasses and those who did not.

The study, which was presented at a recent American Academy of Ophthalmology conference, was not designed to look for causes of the headaches. But there were “quite a few” children with family histories of migraine, Dr. Roth said. Sinus problems and stress headaches also appeared to be common issues, he added.

“I think the take-away message is that it’s very unlikely for headaches to be caused by an eye problem,” he said. “The experience of all the ophthalmologists we talked to is that it almost never seems to be related to the eyes, so it’s probably more fruitful to investigate other causes.”

THE BOTTOM LINE Vision problems are often blamed for childhood headaches, but in reality, the two are rarely related.

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Solar Power as Solution for Storm-Darkened Homes

When Hurricane Sandy wiped out the power in areas like coastal Long Island and the Jersey Shore, what should have been beacons of hope — hundreds of solar panels glinting from residential rooftops — became symbols of frustration.

Robert Stolarik for The New York Times

R. David Gibbs of the nonprofit group Solar One directed volunteers in an installation at the Rockaway Beach Surf Club.

A blog about energy and the environment.

Despite the popular perception that installing solar panels takes a home “off the grid,” most of those systems are actually part of it, sending excess power to the utility grid during the day and pulling electricity back to run the house at night. So when the storm took down power lines and substations across the Northeast, safety systems cut the power in solar homes just like everywhere else.

“Here’s a $70,000 system sitting idle,” said Ed Antonio, who lives in the Rockaways in Queens and has watched his 42 panels as well as those on several other houses in the area go unused since the power went out Oct. 29. “That’s a lot of power sitting. Just sitting.”

Yet there are ways to tap solar energy when the grid goes down, whether by adding batteries to a home system or using the kinds of independent solar generators that have been cropping up in areas hard-hit by the storm.

In the Rockaways, where nearly 14,000 customers still had no power as of Monday morning, volunteers set up a makeshift solar charging station between a car roof and a shopping cart. A multipanel, battery-tied system is helping fuel a relief center’s operations.

In the storm’s wake, solar companies have been donating equipment across New York and other stricken areas to function as emergency power systems now and backups in the longer term. It is important, executives say, to create smaller, more decentralized ways of generating and storing electricity to help ease strain on the grid in times of high demand or failure.

“The grid won’t evolve into something more distributed and fault-tolerant overnight — it’s still dependent upon a centralized system,” said Ben Tarbell, vice president for products at SolarCity, a leading installer that has donated generators after Hurricanes Katrina and Sandy and is developing a battery backup system for its customers. “But the components are starting to come together.”

Generally, home systems like Mr. Antonio’s are engineered to feed electricity from the roof array through an inverter and into the home’s electrical panel, sending the excess to the broader electric grid. But during a failure, the inverter automatically shuts down the system to guarantee that no electricity is flowing into equipment that workers will be trying to fix. The shutdown also ensures that the system’s current will sync with the grid when power is restored and guards against damaging the lines.

Certain systems allow solar panels to run a household directly during prolonged power failures, generally combined with battery storage to keep the power functioning around the clock. Those require installing a separate electrical panel and a more complicated inverter that would switch the flow of electricity entirely over to the house, perhaps to a few critical circuits to run, say, the refrigerator, some lights, television and minimal heat.

“You size the battery system to go with that, and then the system will work just on those dedicated circuits,” said Tony Clifford, chief executive of Standard Solar, an installer based in Maryland.

The cost of adding battery storage to an existing system can range from $500 to $30,000, depending on how large the solar array is and how much the customer wants to be able to run.

Although demand for battery backup is not yet widespread, interest tends to go up after storms, said David Panico, senior vice president of the industrial power group at SunWize, a solar supplier that provided a low-cost mobile system to the Rockaway Beach Surf Club, a hub of that area’s relief effort.

But a drawback is that residents have to figure out where to put the batteries — a particular quandary for those with homes vulnerable to flooding.

So some are looking at electric vehicles as potential backup energy sources instead. In some cases, a car could fuel a house for days on a single charge.

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Gaza Violence Is Unabating as Other Nations Push for Truce

GAZA CITY — Israeli forces killed at least 11 people, including several children, in a single airstrike that destroyed a home here on Sunday, as Israel pressed its bombardment of the Gaza Strip for a fifth day, deploying warplanes and naval vessels to pummel the coastal enclave.

The airstrike, which the Israeli military said was meant to kill a Palestinian militant involved in the recent rocket attacks, was the deadliest operation to date and would no doubt weigh on negotiations for a possible cease-fire. Among the dead were five women and four small children, The Associated Press reported, citing a Palestinian health official.

Two media offices were also hit on Sunday, and Prime Minister Benjamin Netanyahu of Israel warned of a “significant” expansion in the onslaught, which has already killed over 50 people, many of them civilians.

Speaking on Sunday from Bangkok, President Obama condemned missile attacks by Palestinian fighters in Gaza and defended Israel’s right to protect itself.

“There’s no country on earth that would tolerate missiles raining down on its citizens from outside its borders,” Mr. Obama said in his first public comments since the violence broke out. “We are fully supportive of Israel’s right to defend itself.”

The president also said that efforts were under way to address Israel’s security concerns and end the violence. “We’re going to have to see what kind of progress we can make in the next 24, 36, 48 hours,” Mr. Obama said.

Even as the diplomacy intensified on Sunday, the attacks continued in Gaza and Israel.

Mr. Netanyahu made his warning as militants in Gaza aimed at least one rocket at Tel Aviv, a day after Israeli forces broadened the attack beyond military targets, bombing centers of government infrastructure in Gaza, including the four-story headquarters of the Hamas prime minister.

“We are exacting a heavy price from Hamas and the terrorist organizations, and the Israel Defense Forces are prepared for a significant expansion of the operation,” Mr. Netanyahu told his cabinet at its routine Sunday meeting, referring directly to the of thousands of reservists who have been called up and the massing of armor on the Gaza border that many analysts have interpreted as preparations for a possible invasion.

“I appreciate the rapid and impressive mobilization of the reservists who have come from all over the country and turned out for the mission at hand,” Mr. Netanyahu said. “Reservist and conscript soldiers are ready for any order they might receive.”

His remarks were reported shortly after a battery of Israel’s Iron Dome defense shield, hastily deployed near Tel Aviv on Saturday in response to the threat of longer-range rockets, intercepted at least one aimed at the city on Sunday, Israeli officials said. It was the latest of several salvos that have illustrated Hamas’s ability to extend the reach of its rocket attacks.

Since Wednesday, when the escalation of the conflict began, Iron Dome has knocked 245 rockets out of the sky, the military said Saturday, while 500 have struck Israel.

The American-financed system is designed to intercept only rockets streaking toward towns and cities and to ignore those likely to strike open ground. But on Sunday a rocket fired from Gaza plowed through the roof of an apartment building in the southern Israeli city of Ashkelon. There were no immediate reports of casualties there.

In Gaza City, the crash of explosions pierced the quiet several times throughout the early morning.

Before the latest deadly strike involving civilians on Sunday, Hamas health officials had said the Palestinian death toll had risen to 53. One of the latest victims was a 52-year-old woman whose house in the eastern part of Gaza City was bombed around lunchtime.

A few hours earlier, a Hamas militant was killed and seven people were wounded in an attack on the Beach Refugee Camp, where Ismail Haniya, the Hamas prime minister, has a home. Those killed on Sunday included three children ages 1 through 5, the health officials said.

In Israel, 3 civilians have died and 63 have been injured. Four soldiers were wounded on Saturday.

The onslaught continued despite talks in Cairo that President Mohamed Morsi of Egypt said Saturday night could soon result in a cease-fire. Mr. Netanyahu said he would consider a comprehensive cease-fire if the launchings from Gaza stopped.

The attack on Mr. Haniya’s office, one of several on government installations, came a day after he hosted his Egyptian counterpart in the same building, a sign of Hamas’s new legitimacy in a radically redrawn Arab world.

Jodi Rudoren and Fares Akram reported from Gaza City. Reporting was contributed by Isabel Kershner, Carol Sutherland and Iritz Pazner Garshowitz from Jerusalem; Tyler Hicks from Gaza, Peter Baker from Bangkok, Alan Cowell from London, Michael Schwirtz from New York and David D. Kirkpatrick and Mayy El Sheikh from Cairo.

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Keselowski wins Sprint Cup title

HOMESTEAD, Fla. (AP) — Here's a tweet for Brad Keselowski: NASCAR champion.

Roger Penske must like the sound of that, too.

The kid who stole the show at the season-opening Daytona 500 ended the year under the biggest spotlight of them all Sunday, beating five-time champion Jimmie Johnson to deliver the first Sprint Cup championship to Penske Racing.

His first act as champion? Sending a tweet, of course, from inside his car: "We did it!" with a picture of the celebration waiting for him.

"Always, throughout my whole life I've been told I'm not big enough, not fast enough, not strong enough and I don't have what it takes," Keselowski said from the championship stage. "I've used that as a chip on my shoulder to carry me through my whole career. It took until this year for me to realize that that was right, man, they were right.

"I'm not big enough, fast enough, strong enough. No person is. Only a team can do that."

So, with the Penske organization behind him, he delivered a trophy that had eluded "The Captain" since his 1972 NASCAR debut. Although his motorsports organization is considered the gold standard of open-wheel racing — 15 Indianapolis 500 wins — and his empire has made Penske one of the most successful businessmen in America, his NASCAR team has always been just average.

Then came Keselowski, the blue collar, Twitter-loving, Michigan native who visited Penske in 2008 convinced the NASCAR team could win, too.

Three years later, they hoisted the Sprint Cup trophy together at Homestead-Miami Speedway following Keselowski's 15th-place finish Sunday night.

"It's all about the people in our organization and obviously Brad coming on our board three years ago, and we set a plan and we stuck to it," the 75-year-old Penske said. "To win this championship is amazing."

Keselowski needed 125 starts to win his first championship, the fewest starts since four-time champion Jeff Gordon won his first title in 93 starts in 1995. Keselowski also won a second-tier Nationwide title in 2010, his first season with Penske and the owner's first official NASCAR championship.

Gordon, who avoided suspension this week but was fined $100,000 by NASCAR for intentionally wrecking Clint Bowyer last week at Phoenix, overcame the controversy to win the race in a 20th anniversary celebration for sponsor Dupont and Hendrick Motorsports.

It was Gordon's first victory at Homestead, which leaves Kentucky as the only active NASCAR track where he's yet to win.

Who did Gordon beat? Bowyer, of course.

And Bowyer's second-place finish moved him to a career-best second in the final standings. Third-place went to Ryan Newman, who got his break in NASCAR with Penske and spent seven seasons driving for the owner.

"He deserves this probably as much as anybody else, if not more because of what he's done for motor racing in general, NASCAR, his dedication to all forms of race cars is probably more than anybody else in the history of auto racing," Newman said. "I know this is probably one of the sweetest moments in his racing career."

Keselowski started the race up 20 points on Johnson, who blew a tire and crashed last week at Phoenix to give Keselowski a nice cushion and needing only to finish 15th or higher in the finale to wrap up his first championship. But the Penske team took nothing for granted — not after Will Power crashed in the IndyCar finale to blow a 17-point lead and lose the championship.

And this one got tight, too, especially when Keselowski ran out of gas on pit road during green flag pit stops. It put him a lap down with Johnson leading, and Keselowski and crew chief Paul Wolfe frantically tried to figure out how dire the situation had become.

Wolfe crunched the numbers, figuring the No. 2 Dodge would cycle out in the mid-20s, a lap down from the leaders.

"I know the scenario, and it's not good," Keselowski said.

But minutes later, Johnson went to pit road for his own stop and pulled away with a missing lug nut. NASCAR flagged the Hendrick Motorsports team and Johnson was forced back to pit road for another stop.

The Penske team was unsure if Keselowski wanted to know what was going on with Johnson.

"I've got a big picture story if you want to hear it," a team member radioed, then informed Keselowski that Johnson had to pit again.

"Ten-four. Thank you for telling me. We're back in the game. I got it," he said.

It got worse for Johnson from there. He broke a rear end gear in his Chevrolet and went to the garage with 40 laps to go, essentially clinching the championship for Keselowski.

"It all unraveled pretty quick," Johnson conceded.

No longer needing to save fuel, and no longer needing to play it conservatively, he waived off Wolfe's playbook.

"If he's in the garage, let's race," Keselowski said.

That's been Keselowski's attitude since he burst onto the NASCAR scene. He first caught attention as a brash driver for Dale Earnhardt Jr.'s Nationwide Series team, and he was unapologetic for his aggressive driving and his refusal to back down in long-running feuds with established stars Denny Hamlin and Carl Edwards.

But he's been calmer and focused since teaming with Penske in 2009, and his mission has been to give Penske a title. Still, his fame has been for the tweeting, which drew him worldwide attention when he took to Twitter from the cockpit of his car during the red flag in the season-opening Daytona 500.

NASCAR loved the attention it received, but quietly admonished him later for having a phone in his car, which is banned because it can manipulate electronic fuel injection systems. So when he tweeted again last week under red at Phoenix, NASCAR fined him $25,000 — which angered fans who felt a mixed message had been sent.

But Keselowski, who was tweeting into the early morning hours Sunday, handed his phone over with no resistance right before he climbed into the car at Homestead.

The win is the first for Dodge since Richard Petty's Cup title in 1975, and comes as the manufacturer is leaving NASCAR. Penske announced days after the Daytona 500 it will move to Ford next year, and it led to Dodge's decision to pull out of NASCAR.

"Not one failure all year long in that Dodge engine, so I want to thank Dodge for what they've done for us," Penske said after Keselowski secured the title.

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Daniel Stern, Who Studied Babies’ World, Dies at 78

Dr. Daniel Stern, a psychiatrist who increased the understanding of early human development by scrutinizing the most minute interactions between mothers and babies, died on Nov. 12 in Geneva. He was 78.

The cause was heart failure, said his wife, Dr. Nadia Bruschweiler Stern.

Dr. Stern was noted for his often poetic language in describing how children respond to their world — how they feel, think and see. He wrote one of his half-dozen books in the form of a diary by a baby. In another book, he told how mothers differ psychologically from women who do not have children. He coined the term “motherese” to describe a form of communication in which mothers are able to read even the slightest of babies’ emotional signals.

Dr. Stern, who did much of his research at what is now Weill Cornell Medical College and at the University of Geneva, drew inspiration from Jay S. Rosenblatt’s work with kittens at the American Museum of Natural History in the 1950s. Dr. Rosenblatt discovered that when he removed kittens from their cage, they made their way to a specific nipple of their mother’s even when they were as young as one day old. That finding demonstrated that learning occurs naturally at an exceptionally early age in a way staged experiments had not.

Dr. Stern videotaped babies from birth through their early years, and then studied the tapes second by second to analyze interactions between mother and child. He challenged the Freudian idea that babies go through defined critical phases, like oral and anal. Rather, he said, their development is continuous, with each phase layered on top of the previous one. The interactions are punctuated by intervals, sometimes only a few seconds long, of rest, solitude and reflection. As this process goes on, they develop a sense that other people can and will share in their feelings, and in that way develop a sense of self.

These interactions can underpin emotional episodes that occur years in the future. Citing one example in a 1990 interview with The Boston Globe, Dr. Stern told of a 13-month-old who grabbed for an electric plug. His alarmed mother, who moments before had been silent and loving, suddenly turned angry and sour. Two years later, the child heard a fairy tale about a wicked witch.

“He’s been prepared for that witch for years,” Dr. Stern said. “He’s already seen someone he loves turn into something evil. It’s perfectly believable for him. He maps right into it.”

Dr. Stern described such phenomena in 1985 in “The Interpersonal World of the Infant,” which the noted psychologist Stanley Spiegel, in an interview in The New York Times, called “the book of the decade in its influence on psychoanalytic theory.”

In recent years, Dr. Stern ventured beyond childhood development to examine the psychology of how people thought about time. In one experiment, he interviewed people in depth about a single brief moment at breakfast and found that it took them a full hour to describe all that went through their minds in 30 seconds. This resulted in the 2004 book “The Present Moment: In Psychotherapy and Everyday Life,” which called for people to appreciate every moment of experience and discussed the nature of memory.

In 2010, he published “Forms of Vitality: Exploring Dynamic Experience in Psychology, the Arts, Psychotherapy and Development,” which used new understandings of neuroscience to explain human empathy.

Dr. Stern, who wrote hundreds of scientific articles, also painted, wrote poetry and had friendships with important artists. He gave Jerome Robbins, the choreographer, the title for his “Dances at a Gathering.” His friend Robert Wilson, the avant-garde director and playwright, said Dr. Stern’s slow-motion baby films helped inspire his seven-hour “silent opera,” “Deafman Glance.”

“So many things are going on, and the baby is picking them up,” Mr. Wilson said.

Daniel Norman Stern was born in Manhattan on Aug. 16, 1934. He graduated from Harvard and completed his medical degree at the Albert Einstein College of Medicine. After conducting psychopharmacology research at the National Institutes of Health in Bethesda, Md., he did his residency in psychiatry at the Columbia University College of Physicians and Surgeons. He later trained as a psychoanalyst at the Center for Psychoanalytic Training and Research at Columbia.

Dr. Stern is survived by his wife, a physician who collaborated on much of his research; two sons, Michael and Adrien; three daughters, Maria, Kaia and Alice Stern; a sister, Ronnie Chalif; and 12 grandchildren.

Dr. Stern pointed out how the evolution of the human body bolstered mother-child interaction. He noted that the distance between the eyes of a baby at the breast and the mother’s eyes is about 10 inches, exactly the distance for the sharpest focus and clearest vision for a young infant.

“Her smile exerts its natural evocative powers in him and breathes a vitality into him,” he wrote. “It makes him resonate with the animation she feels and shows. His joy rises. Her smile pulls it out of him.”

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Machinima Using Game-Themed Videos to Lure Young Men

LOS ANGELES — Big Media’s hunt for young male viewers is not going so well.

News Corporation is holding a fire sale for IGN, its online network aimed at guys. Disney XD, a cable channel for boys, is growing in popularity — among girls. Comcast’s game-focused G4 channel is retooling its entire programming strategy.

Where are all the “lost boys,” as analysts sometimes call them? Increasingly, the answer involves Machinima.

Intensely focused on 18- to 34-year-old men, Machinima (pronounced ma-SHIN-i-ma) is a Web and mobile distribution network that delivers free game-oriented shows, trailers and news reports. The company, founded in 2000, generates more than 2.2 billion video views a month, according to comScore data. Machinima Prime, a YouTube channel that arrived in August and is dedicated to highly polished episodic series, ranked as the video hub’s No. 1 destination this month.

Despite their escalating reluctance to watch television or go to the movies, young men continue to flock to traditional outlets like Disney’s ESPN or Viacom’s Comedy Central.

And Machinima is certainly not the only online network where young men congregate; Break Media operates testosterone-heavy sites like ManMade.com and HolyTaco.com.

But Machinima has rapidly evolved into a must-visit site for young men by improving the quality of its programming. The company’s mission is not dissimilar to that of cable channels: gain a foothold with inexpensive content (in Machinima’s case it was user-generated videos) and then use that perch to attract higher-quality programs, as AMC did with “Mad Men.”

Ultimately, Machinima intends to produce its own long-form episodic series.

First, Machinima must prove that YouTube can indeed become the new television — that consumers will watch long videos and come back the next week for another episode. In many ways, Machinima just pulled that off with “Halo 4: Forward Unto Dawn,” a five-part live-action series.

“Forward Unto Dawn,” which cost Microsoft $10 million to make and was meant to promote the release of the game Halo 4 on Xbox, has been viewed about 27 million times; four related videos delivered 9.2 million additional views. Machinima also said it experienced very little viewer “fall off,” an industry term for people leaving after watching only a couple of minutes.

Fans understand that this kind of programming is really marketing masquerading as entertainment, said Allen DeBevoise, Machinima’s chief executive. But he contended that “high-quality content is better marketing than traditional advertising; if it’s the equivalent of what people would watch on their own anyway, fans really appreciate that.”

Halo 4 had $220 million in global sales in its first 24 hours in stores.

“If you’re a marketer and not paying serious attention to Machinima, you’re really behind the curve,” said Matt Britton, a founder of MRY, a youth-focused New York marketing firm. “College kids may not be bringing TVs to their dorm rooms anymore, but Machinima, because it has smartly built itself around YouTube, is right there on their laptops.”

NBCUniversal recently decided Machinima was the best way to bring one of its TV movies to consumers. “Battlestar Galactica: Blood and Chrome,” a prequel to the Syfy channel’s 2004 “Battlestar Galactica” series, was cut into 10 episodes and is rolling out on Machinima Prime. “Blood and Chrome” will then run on Syfy next year as a two-hour movie.

Warner Brothers is completing a programming deal with Machinima for a new series tied to its Mortal Kombat game franchise. “Mortal Kombat: Legacy,” a nine-part series, ran on Machinima last year, and at least one installment captured over 10 million views — on par with viewership for some fantasy programs on television.

Machinima, which is based in Los Angeles and makes money by selling advertising, got its start in 2000 as a Web site dedicated to a genre of digital filmmaking that uses video game graphics to create original animated movies.

In 2005, Mr. DeBevoise and his brother, Philip, bought the Web site and set about turning it into a global entertainment network. It has about 200 employees and secured a $35 million round of financing in May; the company declined to discuss revenue or profitability.

Mr. DeBevoise said about 50 percent of Machinima’s total traffic now came from overseas. The company — with backing from MK Capital, Redpoint Ventures and Google, which owns YouTube — also has a significant presence on mobile devices.

Machinima Prime is part of YouTube’s strategy, started a year ago, to lure television viewers and advertisers with higher-quality videos, even if aimed at niche interests.

YouTube invested about $100 million in the overall effort — Machinima received an undisclosed portion — and in recent weeks YouTube began evaluating which channels had done well enough to receive a second round of financing.

In addition to Machinima Prime, YouTube successes include AwesomenessTV, aimed at 12- to 17-year-olds, and Vice, which also courts young men. In an e-mail, Malik Ducard, YouTube’s director of content strategy, called Machinima “a great example of how a Web brand with a laserlike focus on serving a single audience can drive massive eyeballs.”

Mr. Ducard added that YouTube partners like Machinima, sometimes dismissed as niche players, were adding subscribers at a rate “four times faster” than they did just a couple of years ago.

“Niche may not be the right word because that may sound small,” he said. “Billions of views is not small.”

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