Star Silicon Valley analyst felled by Facebook IPO fallout

SAN FRANCISCO (Reuters) - The firing of Citigroup stock analyst Mark Mahaney on Friday in the regulatory fallout from Facebook Inc's initial public offering was greeted with shock and dismay in Silicon Valley, where Mahaney was a well-known and well-liked figure.

"Pretty shocked," was the reaction of Jacob Funds Chief Executive Ryan Jacob, who described Mahaney as one of the most respected financial analysts covering the Internet industry.

"I'd put him at the top. If not at the top, then near the top," said Jacob. "He really knew what to look for."

In addition to firing Mahaney, Citigroup paid a $2 million fine to Massachusetts regulators to settle charges that the bank improperly disclosed research on Facebook ahead of its $16 billion IPO in May.

The settlement agreement said Mahaney failed to supervise a junior analyst who improperly shared Facebook research with the TechCrunch news website. (Settlement agreement: http://r.reuters.com/pyj63t)

The settlement agreement also outlined an incident in which Mahaney failed to get approval before responding to a journalist's questions about Google Inc -- and told a Citigroup compliance staffer that the conversation had not occurred -- even after being warned about unauthorized conversations with the media.

Mahaney declined to comment.

Mahaney got his start in the late 1990s, during the first dot-com boom where he worked at Morgan Stanley for Mary Meeker, one of the star analysts of the time. He went on to work at hedge fund Galleon Group before moving to Citigroup in 2005. Unlike most of his New York-based peers in the analyst world, Mahaney worked in San Francisco's financial district, close to the companies and personalities at the heart of the tech industry.

Earlier this month, Mahaney was named the top Internet analyst for the fifth straight year by Institutional Investor. The review cited fans of Mahaney who praised a "systematic" investment approach that allows him to avoid the "waffling" often evidenced by other analysts.

Mahaney's Buy rating on IAC/InteractiveCorp in April 2011, when the stock traded at $33.32, allowed investors to lock in a 51 percent gain before he downgraded the stock to a Hold at $50.31 a few months later, according to Institutional Investor.

But it wasn't only his stock picks that put him in good stead. He earned kudos for simply being a nice guy.

"He's a kind and thoughtful person and that's evident in the way he deals with people," said Jason Jones of Internet investment firm HighStep Capital. "He's very well liked on Wall Street because of that."

A CAUTIOUS VIEW ON FACEBOOK

Mahaney was only indirectly involved in the incident involving the Facebook research, according to the settlement agreement by Massachusetts regulators released on Friday. But the actions of the junior analyst who worked for him provide an unusual glimpse into the type of behind-the-scenes information trading that regulators are attempting to rein in.

While the Massachusetts regulators did not identify any of the individuals by name, Reuters has learned that the incident involved TechCrunch reporters Josh Constine and Kim-Mai Cutler as well as Citi junior analyst Eric Jacobs.

Jacobs, Constine and Cutler all did not respond to requests for comments.

In early May, shortly before Facebook's IPO, Jacobs sent an email to Cutler and Constine. Constine attended Stanford University at the same time as Jacobs.

Constine, who studied social networks such as Facebook and Twitter for his 2009 Master's degree in cybersociology at Stanford, had a close friendship with Jacobs, according to the settlement agreement.

"I am ramping up coverage on FB and thought you guys might like to see how the street is thinking about it (and our estimates)," Jacobs wrote in the email. The email included an "outline" that Jacobs said would eventually become the firm's 30-40 page initiation report on Facebook.

He also included a "Facebook One Pager" document, which contained confidential, non-public information that Citigroup obtained in order to help begin covering Facebook after the IPO.

Asked by Constine if the information could be published and attributed to an anonymous source, Jacobs responded that "my boss would eat me alive," the agreement said.

A spokeswoman for AOL Inc, which owns TechCrunch, declined to answer questions on the matter, saying only that "We are looking into the matter and have no comment at this time."

Ironically, Mahaney was one of a small group of analysts at the many banks underwriting Facebook's IPO who had cautious views of the richly valued offering. Mahaney initiated coverage of the company with a neutral rating.

Analysts at the top three underwriters on Facebook's IPO - Morgan Stanley, Goldman Sachs and J.P. Morgan - started the stock with overweight or buy recommendations.

Earlier this year, Reuters reported that Facebook had pre-briefed analysts for its underwriters ahead of its IPO, advising them to reduce their profit and revenue forecasts.

Facebook, whose stock was priced at $38 a share in the IPO, closed Friday's regular session at $21.94 and has traded as low as $17.55.

"There were tens of billions of dollars in losses based on hyping the name, a lack of skeptical information and misunderstanding the company," said Max Wolff, chief economist and senior analyst at research firm GreenCrest Capital.

"It's highly unfortunate and darkly ironic that one of the signature regulatory actions from this IPO so far involves punishing analysts for disseminating cautious information about Facebook," he added.

(Editing by Jonathan Weber, Mary Milliken and Lisa Shumaker)

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Landmark Medicare settlement could change lives

CHICAGO (Reuters) – Glenda Jimmo has had a challenging life. Blind since the age of 19, the 76-year-old Bristol, Vermont, resident is confined to a wheelchair due to disabling conditions that include a below-the-knee amputation stemming from her diabetes.

“But it’s been an interesting, full life,” she says. “I have four children.”

Now, she’s lent her name to a class action lawsuit. Its settlement, announced this week, is expected to transform the way that Medicare covers long-term care.

Jimmo requires regular skilled nursing services in her home for wound care and management of her condition. Medicare has not been paying for those services, because the program’s policy was to cover skilled nursing care only when patients had a demonstrated medical potential to improve. That left patients like Jimmo, who need care to maintain their current health status, to fend for themselves.

Under the settlement of the lawsuit, Jimmo v. Sebelius, the U.S. Department of Health and Human Services has agreed to relax Medicare’s requirements for coverage of skilled nursing and therapy services in institutional or home care settings.

The key criterion for coverage will be a demonstrated need for skilled care – regardless of whether there is a recovery prognosis. That means patients already enrolled in Medicare Part A (hospitalization) who need care to maintain their current condition but aren’t likely to improve will qualify for Medicare’s standard benefits.

Medicare already pays for a stay of up to 100 days in a nursing or rehabilitation home following a related hospital admission, with a $ 139 daily co-pay after 20 days of care. (Most Medigap supplemental policies will cover those co-pays.) It also covers skilled home healthcare – like physical therapy or nursing services – if a physician has certified that it is necessary.

Medicare Part A covers up to 100 home visits following a hospital stay. For patients who need care in their homes, Medicare Part B covers care without a prior hospitalization with no limits on visits and no co-payments for services, and a 20 percent co-payment for durable medical equipment.

The settlement‘s impact on patients will be wide, though its focus on skilled nursing care and home-based care means that it won’t be broad enough to allow an elderly, demented assisted-living resident to have her or his bill paid by Medicare. Those people typically rely on unskilled help with their activities of daily living, such as bathing and dressing.

Some 46 percent of Medicare beneficiaries have three or more chronic conditions, according to the Kaiser Family Foundation. About 8 percent use home health services – a figure that certainly will rise as a result of the settlement.

The financial impact on Medicare isn’t clear. Medicare’s direct costs for providing the additional coverage will rise, but the higher costs could be offset if the new preventive services reduce the need for acute care, hospitalization or nursing home care.

“With access to some basic therapies, many of these patients may well be able to avoid nursing and hospital care,” said Judith Stein, director of the Center for Medicare Advocacy (CMA) and a lawyer who represented plaintiffs in the class action. “The settlement is a victory for people who need care, and it will save money for states and the federal government who otherwise would be paying for services that shouldn’t be necessary.”

Jimmo’s care, for example, has been covered by Vermont’s Medicaid program, but some patients have had to dip into their own pockets to cover some of these services.

Court approval of the final settlement isn’t expected for several months. After that, Medicare will have a year to implement the changes and educate healthcare providers about them.

But under the terms of the settlement, more than 10,000 Medicare beneficiaries who were denied benefits for skilled services before January 18, 2011 (when the lawsuit was filed) will have their claims re-examined.

CMA urges patients who think they qualify for coverage under the settlement’s terms to start pushing for it right away by submitting their claims to Medicare. “This is the policy that the government says is now in effect, so patients should push that immediately,” says Gil Deford, CMA’s lead counsel on the case.

ADVOCATING FOR BENEFITS

If you think your care should be covered under the terms of the settlement, here are some key steps to take while you wait for the new rules:

* Educate healthcare providers. Patients shouldn’t assume that skilled nursing facilities or home healthcare providers will immediately understand the settlement’s impact. “Ask them how they plan to implement it, and make the question specific to your own needs,” said Joe Baker, president of the Medicare Rights Center, a non-profit organization that provides free Medicare counseling services.

* Be persistent. “It will take a while for this to be operationalized,” says Baker, who recommends that patients appeal any denials of claims.

* Get help. Free one-on-one help with Medicare claims is available from the State Health Insurance Assistance Program (SHIP), a network of non-profit Medicare counseling services. Use this link to find the SHIP program in your state: https://shipnpr.shiptalk.org/shipprofile.aspx.

The Medicare Rights Center also offers free counseling by phone; (1-800-333-4114).

For Jimmo and other Medicare beneficiaries affected by the settlement, the direct impact will be better care, according to Michael Benvenuto, project director of the Medicare Advocacy Project at Vermont Legal Aid, who served as co-counsel in the lawsuit.

“When healthcare providers don’t think Medicare will pay their bills, they’re less likely to provide the full care that patients need,” he says. “For Glenda, this settlement will insure that she gets adequate maintenance care in her home for as long as she can stay there.”

(The writer is a Reuters columnist. The opinions expressed are his own. For more from Mark Miller, see link.reuters.com/qyk97s)

(Follow us @ReutersMoney or at http://www.reuters.com/finance/personal-finance. Editing by Linda Stern and Steve Orlofsky)

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Amid dire forecast, Sandy a hurricane again

SHIP BOTTOM, N.J. (AP) — With much of the Eastern Seaboard in the path of a rare behemoth storm, residents of the nation's most densely populated corridor contemplated whether to heed dire warnings of torrential rain, high winds and up to 2 feet of snow.

"You know how many times they tell you, 'This is it, it's really coming and it's really the big one,' and then it turns out not to be?" said Alice Stockton-Rossini as she packed up to leave her home a few hundred yards from the ocean in Ship Bottom, N.J.

"I'm afraid people will tune it out because of all the false alarms before, and the one time you need to take it seriously, you won't. This one might be the one."

Hurricane Sandy — upgraded again Saturday just hours after forecasters said it had weakened to a tropical storm — was barreling north from the Caribbean and was expected to make landfall early Tuesday near the Delaware coast, then hit two winter weather systems as it moves inland, creating a hybrid monster storm.

Even if Sandy loses strength and makes landfall as something less than a hurricane, the combined storm was expected to bring misery to a huge section of the East. An 800-mile wide swath of the country could see 50 mph winds regardless of Sandy's strength.

Experts said the storm could be wider and stronger than Irene, which caused more than $15 billion in damage, and could rival the worst East Coast storm on record. On Saturday morning, forecasters said hurricane-force winds of 75 mph could be felt 100 miles away from the storm's center.

Up and down the coast, people were cautioned to be prepared for days without electricity. Jersey Shore beach towns began issuing voluntary evacuations and protecting boardwalks. Atlantic City casinos made contingency plans to close, and officials advised residents of flood-prone areas to stay with family or be ready to leave. Several governors declared states of emergency. Airlines said to expect cancellations and waived change fees for passengers who want to reschedule.

In North Carolina's Outer Banks, light rain was falling Saturday and winds were building up to a predicted 30 to 50 mph. A steady stream of campers and other vehicles hauling boats were leaving the low-lying islands for the mainland. Residents feared a temporary bridge built after Irene last year poked a new inlet through the island could be washed out again, severing the only road off Hatteras Island.

In Ship Bottom, N.J., Russ Linke was taking no chances Saturday. He and his wife secured the patio furniture, packed the bicycles into the pickup truck and headed off the island.

"I've been here since 1997, and I never even put my barbecue grill away during a storm, but I am taking this one seriously," he said. "They say it might hit here; that's about as serious as it can get."

After Irene left millions without power, utilities were taking no chances and were lining up extra crews and tree-trimmers. Wind threatened to topple power lines, and trees that still have leaves could be weighed down by snow and fall over if the weight becomes too much.

New York City began precautions for an ominous but still uncertain forecast. No decision had been made on whether any of the city's public transportation outlets would be shut, despite predictions that a sudden shift of the storm's path could cause a surge of 3 to 6 feet in the subways.

The subway system was completely shuttered during Irene, the first such shutdown ever for weather-related reasons. Irene largely missed the city, but struck other areas hard.

The storm loomed a little more than a week before Election Day, while several states were heavily involved in campaigning, canvassing and get-out-the-vote efforts. Republican presidential nominee Mitt Romney and Vice President Joe Biden both canceled weekend campaign events in coastal Virginia Beach, Va., though their events in other parts of the states were going on as planned. In Rhode Island, politicians asked supporters to take down yard signs for fear they might turn into projectiles in the storm.

Sandy killed more than 40 people in the Caribbean, wrecked homes and knocked down trees and power lines.

Early Saturday, the storm was about 355 miles (571 kilometers) southeast of Charleston, S.C. Its sustained wind speed was about 75 mph (121 kph).

Sandy was projected to hit the Atlantic Coast early Tuesday. As it turns back to the north and northwest and merges with colder air from a winter system, West Virginia and further west into eastern Ohio and southern Pennsylvania are expected to get snow. Forecasters were looking at the Delaware shore as the spot the storm will turn inland, bringing 10 inches of rain and extreme storm surges, said Louis Uccellini, environmental prediction director for the National Oceanic and Atmospheric Administration.

Up to 2 feet of snow was predicted to fall on West Virginia, with lighter snow in parts of Ohio and Pennsylvania.

Jeff Masters, meteorology director of the forecasting service Weather Underground, said this could be as big, perhaps bigger, than the worst East Coast storm on record, a 1938 New England hurricane that is sometimes known as the Long Island Express, which killed nearly 800 people.

While rains were light Saturday in North Carolina's Outer Banks, winds were building up to a predicted 30 to 50 mph and a steady stream of campers and other vehicles hauling boats or with kayaks strapped to the roof were headed off the low-lying islands to the mainland. Local residents were preparing for power outages lasting days and fearing a temporary bridge built after Hurricane Irene poked a new inlet through the island last year could be washed out again, cutting off the only road out of Hatteras Island.

Retirees Larry and Jean Collier, of Brantford, Ontario, were leaving their beachfront hotel in Kill Devil Hills, N.C., early Saturday and trying to plot their route home knowing they risked driving into a mess.

"I'll try to split (the trip) right down the middle, not too close to Washington, not too far west," Larry Collier said. "The storm has kind of put a wrench in it."

Others were shrugging off dire predictions. Warren Ellis and his 10-foot-long camper were stuck on an uninhabited Outer Banks island on his annual fishing pilgrimage, the conditions too rough Saturday for the ferry to carry him to safer ground.

"We might not get off here until Tuesday or Wednesday, which doesn't hurt my feelings that much because the fishing's going to be really good after this storm. It's always good after a storm," said Ellis, 44, of Ammissville, Va.

___

Dalesio reported from Kill Devil Hills, N.C. Associated Press writers Brock Vergakis in Duck, N.C., Frank Eltman in Freeport, N.Y., George Walsh in Albany, N.Y., Joe Mandak in Pittsburgh, Kathy Matheson in Philadelphia, Seth Borenstein in Washington and Christine Armario in Miami contributed to this report.

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Amnesty Int: Ivory Coast torturing detainees

ABIDJAN, Ivory Coast (AP) — Ivory Coast security officials are torturing dozens of detainees by administering electric shocks and other forms of abuse, Amnesty International alleged Friday.

The victims include people charged with endangering state security in the wake of a recent spate of attacks targeting military installations. Since early August, unknown gunmen have carried out roughly 10 attacks at checkpoints, military bases and other installations throughout the country, including in the commercial capital of Abidjan.

United Nations officials have said that more than 200 people have been detained on suspicion of involvement in the attacks, and that torture has been documented at multiple detention facilities.

Gaetan Mootoo, West Africa researcher for Amnesty, said an investigation team received reports of a range of abuses during a recent month-long visit.

“We were able to meet dozens of detainees who told us how they have been tortured by electricity or had molten plastic poured on their bodies,” Mootoo said. “Two of them have been sexually abused. Some have been held for many months denied contact with their families and access to lawyers.”

Army spokesman Cherif Moussa denied the torture allegations Friday. “Our camps are not concentration camps,” he said.

However, he acknowledged the possibility that individual soldiers may occasionally “go beyond what they are allowed to do” when dealing with inmates.

He added that the government tried to ensure that inmates’ rights were respected. “We want to prove that we are not abusing people’s rights,” he said. “We’re working for the state’s security. We’re working for the people’s security.”

Earlier this month, the Associated Press interviewed former detainees at a military camp in the southwestern port town of San Pedro who described widespread beatings as well as the use of electric shocks. A guard at the camp corroborated most of the claims, though camp commanders denied them.

In its statement Friday, Amnesty described how one detainee, a police officer, had died as a result of the torture he endured at the San Pedro camp.

“Serge Herve Kribie was arrested in San Pedro on August 21 by the national army and interrogated about recent attacks,” Amnesty said. “He was stripped naked, tied to a pole, had water poured on his body, and was then subjected to electric shocks. He died a few hours later.”

Amnesty said that some detainees were only released after ransoms were paid. One detainee told the rights group: “My parents first paid 50,000 CFA (a little under US $ 100) and then after my release, my jailers went at my house and demanded a higher sum. I told them that I couldn’t pay such an amount and they agreed to receive 20,000 CFA more (about US$ 40).”

The government has blamed the attacks on allies of former President Laurent Gbagbo, who was arrested in April 2011. Gbagbo’s refusal to cede office after losing the November 2010 election to now-President Alassane Ouattara sparked six months of violence in which at least 3,000 were killed.

Amnesty researchers also met with some of the more than 100 Gbagbo allies – including his wife, Simone – who are being detained on charges stemming from the post-election violence.

“Some of them told us that despite the fact that they have been held since April 2011, they only saw an investigating judge twice for less than a few hours,” Mootoo said.

Despite widespread evidence that forces loyal to Ouattara also committed atrocities during the violence, none have been arrested or credibly investigated, sparking allegations of victor’s justice.

Also Friday, in Amsterdam, judges at the International Criminal Court rejected a request for release by former president Gbagbo, who is being detained on suspicion of crimes against humanity.

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Vatican: Savile’s papal honor cannot be removed

LONDON (AP) — The Vatican said Saturday it never would have given Jimmy Savile his papal knighthood had it known of allegations the British TV star was a child sex predator, but that it can’t rescind the honor now that he has died.

The Catholic Church of England wrote to the Holy See last week, asking it to consider whether it could posthumously remove the honor awarded to Savile because of the many recent child sex abuse allegations against him. Savile, a much-loved BBC children’s television host, died last year at age 84.

The church said its leader, Archbishop of Westminster Vincent Nichols, made the request because the “deep distress” of his alleged victims and in light of public concerns about his name remaining on the papal honors lists.

But the Rev. Federico Lombardi, the Vatican‘s spokesman, told The Associated Press it couldn’t rescind the knighthood awarded to Savile because there simply is no permanent register from which to strike it. The names of people who receive the knighthood don’t appear in the Holy See’s yearbook and that the honor dies with the individual, Lombardi said.

He also said Savile never would have received the honor had allegations about his behavior been known, and Lombardi stressed the Vatican’s firm condemnation of any type of sexual abuse against children.

Savile was made a Knight Commander of St. Gregory the Great by Pope John Paul II in 1990 for his charity work. He was also knighted by Queen Elizabeth II for his services to charity and entertainment.

But police now believe Savile to be one of the most prolific sex offenders in Britain in recent history, with a “staggering number” of people reporting abuses by him after his death.

Some 300 potential victims have come forward with abuse allegations, police said. Most of them say they were abused by Savile, but some say they were abused by other people, Metropolitan Police said Friday.

The popular TV presenter’s family spoke out Saturday about its shock over the recent revelations.

“These things we knew absolutely nothing at all about until these revelations have come out now,” Savile’s nephew, Roger Foster, told the BBC. “It’s just so unexpected, so totally, at first, unbelievable.”

British police said they also have received many reports of past, unrelated child sex abuse cases since the scandal surrounding Savile came to light.

One such case was resolved in British courts on Friday.

Reginald Davies, a 78-year-old retiree, was convicted of 13 offenses against four girls, including the rape of one under the age of 12, and sentenced to 11 years in prison.

The crimes took place between 1949 and 1973, and police said the case appeared to involve the oldest criminal charges ever heard in a British court. Davies had moved to Australia, but two of his victims confronted him and reported him to police while vacationing there in 2008.

____

AP correspondent Nicole Winfield reported from Rome.

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