DealBook: Goldman Names Gregg Lemkau as New Co-Head of M.&A.

Goldman Sachs named Gregg R. Lemkau as a new co-head of global mergers and acquisitions on Monday, according to an internal memorandum reviewed by DealBook.

Mr. Lemkau, who has been based in London since 2008, will hold that title along with Gene T. Sykes, who has served as the sole co-head since the departure of Yoel Zaoui in April.

“Gregg will work closely together with Gene, as well as with Michael Carr, head of Americas M.&A., to lead this important client franchise, which is core to our investment banking business,” Goldman’s three heads of investment banking, Richard J. Gnodde, David Solomon and John S. Weinberg, wrote in the memo.

Mr. Lemkau is currently the head of mergers for Europe, the Middle East, Africa and Asia Pacific, and was previously a global co-head of the technology, media and telecommunications group. He was previously the chief operating officer of the firm’s investment bank and co-head of its health care banking group.

He also comes from a banking family of sorts. His brother Curt, known as Chip, is a wealth management executive at Goldman, according to Financial Industry Regulatory Authority records. And a sister, Kristin, is a senior media relations executive at JPMorgan Chase.

He will be succeeded as the head of mergers for Europe by Gilberto Pozzi, who currently is a co-head of Goldman’s global consumer retail group. Mr. Pozzi will in turn be succeeded by F.X. de Mallmann.

Here is the memo for Mr. Lemkau:

We are pleased to announce that Gregg Lemkau will become co-head of Global Mergers & Acquisitions alongside Gene Sykes. Gregg will work closely together with Gene, as well as with Michael Carr, head of Americas M.&A., to lead this important client franchise which is core to our investment banking business.

Gregg has been head of Mergers & Acquisitions for EMEA and Asia Pacific since 2011. Prior to this, he was global co-head of the Technology, Media and Telecom Group and served as chief operating officer for the Investment Banking Division. Gregg serves as co-chair of the Firmwide Commitments Committee and is a member of the Partnership Committee and the Investment Banking Division Operating Committee. He joined Goldman Sachs as an analyst in the Mergers & Acquisitions Department in 1992 and was named managing director in 2001 and partner in 2002.

Please join us in congratulating Gregg and wishing him continued success in his new role.

Richard J. Gnodde
David Solomon
John S. Weinberg

And here is the one for Mr. Pozzi:

We are pleased to announce that Gilberto Pozzi will become head of EMEA Mergers & Acquisitions. In his new role, Gilberto will strive to further deepen the dialogue with our clients on their M.&A. strategic objectives, continue to enhance our execution standards and share best practices across industry and country teams. Gilberto will retain responsibilities for many of his clients in the consumer and retail sector while sourcing and executing M.&A. transactions across various countries and industry groups in EMEA.

Gilberto has been co-head of the Global Consumer Retail Group since 2010. Previously, he was head of the Consumer Retail Group for EMEA. Gilberto joined Goldman Sachs as an associate in London in 1995 and was named managing director in 2003 and partner in 2008.

Please join us in congratulating Gilberto and wishing him continued success in his new role.

Richard J. Gnodde
David Solomon
John S. Weinberg

And here is the one for Mr. de Mallmann:

We are pleased to announce that F.X. de Mallmann will become co-head of the Global Consumer Retail Group alongside Kathy Elsesser. In addition to his new role, F.X. will continue to be responsible for Investment Banking Services (I.B.S.) in EMEA.

F.X. has been head of I.B.S. in EMEA since January 2012. Prior to this, he was head of the Financing Group in EMEA from 2008 to 2011. Before that, F.X. served as chief operating officer for the Investment Banking Division. From 2002 to 2007, he served as head of Investment Banking for Switzerland. F.X. joined Goldman Sachs as an analyst in London in 1993 and was named managing director in 2003 and partner in 2004.

Please join us in congratulating F.X. and wishing him continued success in his new role.

Richard J. Gnodde
David Solomon
John S. Weinberg

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IHT Rendezvous: A Different Kind of Labyrinth in the London Underground

LONDON — The artist Mark Wallinger has a few strings to his bow: he spent 10 days in a bear suit in 2004 in the Neue Nationalgalerie in Berlin; he won the Turner Prize in 2007; he enjoyed a few days of media admiration/derision in 2009 when he proposed a 50-meter white horse as a public art project in Ebbsfleet in Kent.

On Thursday, Mr. Wallinger presented his newest work: a commission from the London Underground, for which he has created 270 individual panels — one for every Tube station — showing a labyrinth design in black on white square enamel panels. A small red cross marks a point of entry, and each panel is individually numbered, according to the order used by the winner of the Tube Challenge, an eccentric affair in which people compete to pass through every Tube stop on the network in the shortest possible time. (The current record is 16 hours, 29 minutes and 59 seconds.)

The Underground has long had a tradition of commissioning art. Its headquarters in St. James’s Park boasts reliefs by Henry Moore and Jacob Epstein among others, and its Art on the Underground program has shown admirable eclecticism in its choice of artists for commissioned posters, map brochures and in-station work. Mr. Wallinger’s Labyrinth project is part of Art on the Underground’s celebration, this year, of the Tube’s 150th anniversary.

“Something like 4 million people every day have an opportunity to encounter the art works,” said Tamsin Dillon, the head of Art on the Underground, in a statement marking the official opening of the project.

On the basis of visits, on Friday morning, to 4 of the 10 Tube stations at which the panels were displayed, and the remaining 260 stations will get theirs over the next few months, it seems clear that opportunity is one thing, actual encounters are another.

At Baker Street station (No. 58), my first stop, a friendly Tube employee went to find out where the panel was located and came to look at it with me. It was next to the Marylebone Road exit, near a few public phones. In and out streamed the passengers; no one except the two of us seemed to notice the new artwork. “Nice,” he said cautiously.

Similar indifference pertained at Oxford Circus (no. 60), Victoria (no. 103) and Green Park (no. 232), where a man stood consulting his cell phone right next to the panel without noticing it was there.

While this may be a bit discouraging for Mr. Wallinger and Ms. Dillon, there was something rather nice about seeking out the unobtrusively placed artworks, and a slightly Harry Potter-ish aspect to being the only person who could apparently see them as the rest of the world wandered by. Looking for the panels may not be the journey that Mr. Wallinger had in mind (unlike a maze, the labyrinth allows a straightforward passage between entrance and exit, and presumably symbolizes each passenger’s trajectory), but it’s a pleasant diversion in the hurly-burly of commuting. I see a Labyrinth Challenge coming up.

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Paternos issue report, challenge Freeh's findings

STATE COLLEGE, Pa. (AP) — A report commissioned by Joe Paterno's family says the late coach did nothing wrong in his handling of the Jerry Sandusky child sex abuse scandal and portrays the late Hall of Fame coach as the victim of a "rush to injustice" created by former FBI director Louis Freeh's investigation of the case for Penn State.

The family's critique, released Sunday, argues that the findings of the Freeh report published last July were unsupported by the facts.

Former U.S. Attorney General Dick Thornburgh, one of the experts assembled by the family's lawyer to review Freeh's report last year to Penn State, called the document was fundamentally flawed and incomplete.

Freeh's report reached "inaccurate and unfounded findings related to Mr. Paterno and its numerous process-oriented deficiencies was a rush to injustice and calls into question" the investigation's credibility, Thornburgh was quoted as saying.

In a statement released Sunday through a spokesman, Freeh defended his work.

"I stand by our conclusion that four of the most powerful people at Penn State failed to protect against a child sexual predator harming children for over a decade," he said.

Paterno's family released what it billed as an exhaustive response to Freeh's work, based on independent analyses, on the website paterno.com.

"We conclude that the observations as to Joe Paterno in the Freeh report are unfounded, and have done a disservice not only to Joe Paterno and the university community," the family's report said, "but also to the victims of Jerry Sandusky and the critical mission of educating the public on the dangers of child sexual victimization."

Freeh's findings also implicated former administrators in university president Graham Spanier, athletic director Tim Curley and retired vice president Gary Schultz. Less than two weeks after the Freeh report was released in July, the NCAA acted with uncharacteristic speed in levying massive sanctions against the football program for the scandal.

"Taking into account the available witness statements and evidence, it is more reasonable to conclude that, in order to avoid the consequences of bad publicity, the most powerful leaders at Penn State University — Messrs. Spanier, Schultz, Paterno and Curley — repeatedly concealed critical facts relating to Sandusky's child abuse" from authorities, trustees and the university community, Freeh wrote in releasing the report.

The former administrators have vehemently denied the allegations. So, too, has Paterno's family, though it reserved more extensive comment until its own report was complete.

The counter-offensive began in earnest this weekend. The family's findings said that Paterno:

— Never asked or told anyone not to investigate an allegation made against Sandusky 12 years ago, Saturday, Feb. 9, 2001.

— Never asked or told former administrators not to report the 2001 allegation.

— And never asked or told anyone not to discuss or hide information reported by graduate assistant Mike McQueary about the 2001 allegation.

"Paterno reported the information to his superior(s) pursuant to his understanding of university protocol and relied upon them to investigate and report as appropriate," the family's analysis said.

Paterno's widow, Sue, broke her silence Friday in a letter to hundreds of former players informing them of the report's impending release. "The Freeh report failed and if it is not challenged and corrected, nothing worthwhile will have come from these tragic events," she wrote.

"I had expected to find Louis Freeh had done his usual thorough and professional job," Thornburgh said in a video posted on paterno.com. "I found the report to be inaccurate in some respects, speculative and unsupported to the record compiled ... in short, fundamentally flawed as to the determinations made to the role — if any — Mr. Paterno played in any of this."

Freeh was brought in to conduct an independent investigation of the school's response to allegations and find any shortcomings in governance and compliance to make sure failures don't happen again, Penn State said in a statement Sunday. Freeh made 119 recommendations to strengthen policies, and the majority have been implemented, according to the school.

University trustees and leaders have been criticized by some dissatisfied alumni, ex-players and community residents for their handling of Paterno's dismissal, the Freeh report and the sanctions.

"It is understandable and appreciated that people will draw their own conclusions and opinions from the facts uncovered in the Freeh report," the school said.

Freeh, in his report, said his team conducted 430 interviews and analyzed over 3.5 million emails and documents. The former federal judge said evidence showed Paterno was involved in an "active agreement to conceal" and his report cited email exchanges, which referenced Paterno, between administrators about allegations against Sandusky in 1998 and 2001.

According to Thornburgh's findings, Freeh's report relied on about 30 documents, including three notes authored by Paterno, and 17 emails. Four emails referenced Paterno — none sent by the octogenarian coach who notoriously shunned modern electronic technology.

Sandusky, 69, was sentenced to at least 30 years in prison in October after being convicted last summer of 45 criminal counts. Prosecutors said assaults occurred off and on campus, including the football building.

His arrest in November 2011 triggered the turmoil that led to Paterno's firing days later. Under pressure, Spanier left as president the same day. Curley was placed on administrative leave, while Schultz retired.

Spanier, Curley and Schultz are awaiting trial on obstruction and conspiracy, among other charges. They have maintained their innocence.

Critics have said that Freeh's team didn't speak with key figures including Curley, Schultz and Paterno, who died in January 2012 at age 85. The authors of the emails referenced in Freeh's report, which included Curley and Schultz, were not interviewed by Freeh, the family's analysis said.

Spanier spoke to Freeh six days before the report was released July 12.

"They missed so many key people. They didn't interview most of the key players, with the exception of President Spanier, who at the last minute we brought in and interviewed at a time when frankly the report ... was pretty well all prepared," Thornburgh said on the video.

Freeh said he respected the family's right to conduct a campaign to "shape the legacy of Joe Paterno," but called the critique self-serving. Paterno's attorney was contacted for an interview with the coach, he said, and Paterno spoke with a reporter and biographer before his death but not Freeh's team.

Curley and Schultz also declined numerous requests for interviews, Freeh said. They have been facing criminal charges since November 2011.

Freeh on Sunday cited grand jury testimony by Paterno in 2011 in which Paterno said a graduate assistant relayed to him the 2001 allegation against Sandusky of a "sexual nature" with a child.

He referred to a key point in the July report in which he said Spanier, Schultz and Curley drew up a plan that called for reporting Sandusky to the state Department of Public Welfare in 2001. But Curley later said in an email that he changed his mind "after giving it more thought and talking it over with Joe," according to Freeh's findings.

Said Freeh on Sunday: "These men exhibited a striking lack of empathy for Sandusky's victims by failing to inquire as to their safety and well-being, especially by not even attempting to determine the identity of the child" in the 2001 allegation.

The Paterno family report said Freeh chose not to "present alternative, more plausible, conclusions" about Paterno's actions. Their attorney, Wick Sollers, responded Sunday that Freeh didn't take the time to read the family's critique, or address accusations of procedural shortcomings.

"A failure to consider the facts carefully is exactly the problem our expert analysis highlights," Sollers said. "Everyone, including Mr. Freeh, should take the time to study this report."

Sue Paterno had directed Sollers, to review Freeh's report and her husband's actions. Sollers brought in Thornburgh, as well as former FBI profiler and special agent Jim Clemente, described as a child molestation and behavioral expert.

Also brought in was Dr. Fred Berlin, a psychologist from Johns Hopkins Hospital and School of Medicine whose profile lists him as the founder of the Johns Hopkins Sexual Disorders Clinic.

The analysis included interviews, including of Paterno before his death, as well as a review of documents and testimony and "information from our access to the lawyers for other Penn State administrators."

The Paterno family's analysis said Freeh's report turned into a platform for scapegoating Paterno rather than seizing on an opportunity to educate about identifying child sex abuse victims, and ignored "decades of expert research and behavioral analysis regarding the appropriate way to understand and investigate a child victimization case."

It said expert analysis showed Sandusky "fooled qualified child welfare professionals and law enforcement, as well as laymen inexperienced and untrained in child sexual victimization like Joe Paterno." The coach respected Sandusky as an assistant, but knew little about Sandusky's personal life, the analysis said, though Freeh's report "missed that they disliked each other personally, had very little in common outside work, and did not interact much if at all socially."

Actions by entities outside of Penn State were not a focus for Freeh's review. "This was an internal investigation into Penn State's response ... and that is how the University has utilized the report," the school said.

Penn State removed a bronze statue of Paterno outside Beaver Stadium on July 22. The next day, the NCAA in levying sanctions said Freeh's report revealed "an unprecedented failure of institutional integrity leading to a culture in which a football program was held in higher esteem."

The NCAA improperly relied on that report and never identified a rules infraction "based on Sandusky's crimes, much less an infraction by Penn State that implicated the NCAA's jurisdiction and core mission of ensuring competitive balance," the Paterno family report said.

An NCAA spokeswoman said the organization stood by its previous statements and declined comment Sunday.

A four-year bowl ban and steep scholarship cuts were included among the sanctions, while 111 wins between 1998 and 2011 under Paterno were vacated. It meant Paterno no longer holds the record for most wins by a major college coach.

___

Online:

Family report: http://paterno.com/

Freeh comment: http://www.freehgroup.com/news/29

Penn State statement: http://progress.psu.edu/resource-library/story/freeh-investigation-findings-used-to-improve-penn-state-operations

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Boeing 787 Completes Test Flight

A Boeing 787 test plane flew for more than two hours on Saturday to gather information about the problems with the batteries that led to a worldwide grounding of the new jets more than three weeks ago.

The flight was the first since the Federal Aviation Administration gave Boeing permission on Thursday to conduct in-flight tests. Federal investigators and the company are trying to determine what caused one of the new lithium-ion batteries to catch fire and how to fix the problems.

The plane took off from Boeing Field in Seattle heading mostly east and then looped around to the south before flying back past the airport to the west. It covered about 900 miles and landed at 2:51 p.m. Pacific time.

Marc R. Birtel, a Boeing spokesman, said the flight was conducted to monitor the performance of the plane’s batteries. He said the crew, which included 13 pilots and test personnel, said the flight was uneventful.

He said special equipment let the crew check status messages involving the batteries and their chargers, as well as data about battery temperature and voltage.

FlightAware, an aviation data provider, said the jet reached 36,000 feet. Its speed ranged from 435 to 626 miles per hour.

All 50 of the 787s delivered so far were grounded after a battery on one of the jets caught fire at a Boston airport on Jan. 7 and another made an emergency landing in Japan with smoke coming from the battery.

The new 787s are the most technically advanced commercial airplanes, and Boeing has a lot riding on their success. Half of the planes’ structural parts are made of lightweight carbon composites to save fuel.

Boeing also decided to switch from conventional nickel cadmium batteries to the lighter lithium-ion ones. But they are more volatile, and federal investigators said Thursday that Boeing had underestimated the risks.

The F.A.A. has set strict operating conditions on the test flights. The flights are expected to resume early this week, Mr. Birtel said.

Battery experts have said it could take weeks for Boeing to fix the problems.

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Egypt Court Orders Block on YouTube Over Anti-Islam Video

CAIRO (AP) — A Cairo court on Saturday ordered the government to block access to the video-sharing Web site YouTube for 30 days for carrying an anti-Islam film that set off deadly riots last year, but the ruling can be appealed and, based on precedent, may not be enforced.

Judge Hassouna Tawfiq described the video as “offensive to Islam” and to the Prophet Muhammad. The first protests against the film erupted in Cairo last September, before spreading to more than 20 countries, leaving more than 50 people dead.

The 14-minute video, said to be a trailer for a movie called “Innocence of Muslims,” portrays Muhammad as a religious fraud, a womanizer and a pedophile. It was produced in the United States by an Egyptian-born Christian who is now a United States citizen.

Egypt’s new Constitution includes a ban on insulting “religious messengers and prophets.” Broadly worded blasphemy laws also were in effect under President Hosni Mubarak, who was ousted in a popular revolt two years ago.

Similar orders to censor pornographic Web sites have not been enforced because of the high costs associated with technical applications, although blocking YouTube may be easier.

YouTube’s parent company, Google, last year declined requests to remove the video from the Web site, but restricted access to it in certain countries, including Egypt, Libya and Indonesia, because it said the video broke laws in those countries. At the height of the protests in September, YouTube was ordered blocked in several countries, including Iran, Pakistan and Afghanistan. Saudi Arabia issued an order blocking all Web sites with access to the film.

Mohammed Hamid Salim, a lawyer who filed the lawsuit in Cairo, charged that the film constituted a threat to Egypt’s security. When the video was released, protesters in Cairo scaled the American Embassy’s walls and brought down the flag.

Some liberal and secular Egyptians fear that Egypt’s new Islamist leaders will try to curb freedoms related to religion. An Egyptian court last year convicted in absentia seven Egyptian Coptic Christians and an American pastor based in Florida, sentencing them to death on charges linked to the film. The case was seen as largely symbolic because the defendants, most of whom live in the United States, were unlikely to ever face the sentence.

In a related case, a Cairo court convicted a Coptic Christian blogger who shared the film online. The blogger was sentenced to three years in prison, but was released on bail.

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Northeast storm disrupts travel for sports teams

Several professional and college sports teams were forced to rearrange their travel plans as a massive storm swept through the Northeast, dumping a few feet of snow in some areas.

The NBA's New York Knicks were stuck in Minnesota after playing the Timberwolves on Friday night, hoping to try to fly home sometime Saturday. The San Antonio Spurs were also staying overnight in Detroit after seeing their 11-game winning streak fall to the Pistons, awaiting word on when they might be able to fly to New York for their game Sunday night at Brooklyn.

"We can't get there tonight — we know that," Spurs coach Gregg Popovich said. "So we're going to stay here tonight and try to get there (Saturday). Hopefully, we will be able to get there, but at this point, we don't know."

Airlines canceled more than 5,300 flights through Saturday, and New York City's three major airports and Boston's Logan Airport closed.

The Brooklyn Nets planned to take a train home instead of flying from Washington D.C. after losing to the Wizards on Friday night.

Knicks coach Mike Woodson said before a 100-94 victory that his team initially planned to fly home after the game, but the flight had already been postponed. New York is scheduled to play the Los Angeles Clippers at Madison Square Garden on Sunday.

The NHL's Boston Bruins pushed back the start of Saturday's game against the Tampa Bay Lightning by six hours because of the blizzard. The game originally slated for 1 p.m. was rescheduled for 7 p.m., but Boston was expected to be one of the cities hit hardest by the storm.

The storm had dumped more than 2 feet of snow on New England by early Saturday and knocked out power to 650,000 customers. The National Weather Service said up to 3 feet of snow is expected in Boston, threatening the city's 2003 record of 27.6 inches.

The Bruins and Lightning each already had road games scheduled for Sunday night.

The New Jersey Devils were still scheduled to host the Pittsburgh Penguins at 1 p.m., while the New York Islanders were slated to play at home against the Buffalo Sabres at 7 p.m.

Two Ivy League men's college basketball games that were scheduled for Saturday night were moved back to Sunday because of treacherous travel conditions.

Dartmouth will play at Cornell at noon on Sunday in Ithaca, N.Y., and Harvard will visit Columbia at 2 p.m. Sunday in New York. Dartmouth played at Columbia on Friday night, and Harvard played at Cornell. Two other Ivy League games were still scheduled to be played Saturday night, with Yale visiting Princeton and Brown playing at Pennsylvania.

Aqueduct also called off Saturday's card because of the storm. The track and Belmont Park were expected to remain open for wagering on out-of-town races, with racing scheduled to resume Sunday.

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In Nigeria, Polio Vaccine Workers Are Killed by Gunmen

At least nine polio immunization workers were shot to death in northern Nigeria on Friday by gunmen who attacked two clinics, officials said.

The killings, with eerie echoes of attacks that killed nine female polio workers in Pakistan in December, represented another serious setback for the global effort to eradicate polio.

Most of the victims were women and were shot in the back of the head, local reports said.

A four-day vaccination drive had just ended in Kano State, where the killings took place, and the vaccinators were in a “mop-up” phase, looking for children who had been missed, said Sarah Crowe, a spokeswoman for the United Nations Children’s Fund, one of the agencies running the eradication campaign.

Dr. Mohammad Ali Pate, Nigeria’s minister of state for health, said in a telephone interview that it was not entirely clear whether the gunmen were specifically targeting polio workers or just attacking the health centers where vaccinators happened to be gathering early in the morning. “Health workers are soft targets,” he said.

No one immediately took responsibility, but suspicion fell on Boko Haram, a militant Islamist group that has attacked police stations, government offices and even a religious leader’s convoy.

Polio, which once paralyzed millions of children, is now down to fewer than 1,000 known cases around the world, and is endemic in only three countries: Nigeria, Pakistan and Afghanistan.

Since September — when a new polio operations center was opened in the capital and Nigeria’s president, Goodluck Jonathan, appointed a special adviser for polio — the country had been improving, said Dr. Bruce Aylward, chief of polio eradication for the World Health Organization. There have been no new cases since Dec. 3.

While vaccinators have not previously been killed in the country, there is a long history of Nigerian Muslims shunning the vaccine.

Ten years ago, immunization was suspended for 11 months as local governors waited for local scientists to investigate rumors that it caused AIDS or was a Western plot to sterilize Muslim girls. That hiatus let cases spread across Africa. The Nigerian strain of the virus even reached Saudi Arabia when a Nigerian child living in hills outside Mecca was paralyzed.

Heidi Larson, an anthropologist at the London School of Hygiene and Tropical Medicine who tracks vaccine issues, said the newest killings “are kind of mimicking what’s going on in Pakistan, and I feel it’s very much prompted by that.”

In a roundabout way, the C.I.A. has been blamed for the Pakistan killings. In its effort to track Osama bin Laden, the agency paid a Pakistani doctor to seek entry to Bin Laden’s compound on the pretext of vaccinating the children — presumably to get DNA samples as evidence that it was the right family. That enraged some Taliban factions in Pakistan, which outlawed vaccination in their areas and threatened vaccinators.

Nigerian police officials said the first shootings were of eight workers early in the morning at a clinic in the Tarauni neighborhood of Kano, the state capital; two or three died. A survivor said the two gunmen then set fire to a curtain, locked the doors and left.

“We summoned our courage and broke the door because we realized they wanted to burn us alive,” the survivor said from her bed at Aminu Kano Teaching Hospital.

About an hour later, six men on three-wheeled motorcycles stormed a clinic in the Haye neighborhood, a few miles away. They killed seven women waiting to collect vaccine.

Ten years ago, Dr. Larson said, she joined a door-to-door vaccination drive in northern Nigeria as a Unicef communications officer, “and even then we were trying to calm rumors that the C.I.A. was involved,” she said. The Iraq and Afghanistan wars had convinced poor Muslims in many countries that Americans hated them, and some believed the American-made vaccine was a plot by Western drug companies and intelligence agencies.

Since the vaccine ruse in Pakistan, she said, “Frankly, now, I can’t go to them and say, ‘The C.I.A. isn’t involved.’ ”

Dr. Pate said the attack would not stop the newly reinvigorated eradication drive, adding, “This isn’t going to deter us from getting everyone vaccinated to save the lives of our children.”

Aminu Abubakar contributed reported from Kano, Nigeria.

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Fair Game: Credit-Rating Club Is Tough to Get Into

Ozier Muhammad/The New York Times

Ann Rutledge and her husband, Sylvain Raynes, of R&R Consulting, which has been trying to gain S.E.C. recognition as a debt ratings agency.

That was probably a common response to the news last week that the Justice Department had filed a civil suit against Standard & Poor’s, one of the two big credit ratings agencies that were so central to the mortgage boom and bust. The department said that S.& P. misled investors by presenting its ratings as the product of objective analyses when, the suit says, they were more about generating revenue to the firm. S.& P. denied the allegations, saying it was prepared to go to trial. 

Many people have been disappointed that S.& P. and Moody’s Investors Service, the big and powerful companies that are supposed to assess the creditworthiness of bonds, have escaped culpability. Not only do these companies still hold sway in securities markets, they’ve also hung on to their lush profits from the glory days of mortgage origination. During 2005 and 2006, for example, Moody’s made $238 million by rating complex mortgage instruments. Investors who trusted those ratings lost billions.

Given that the financial crisis began unfolding more than five years ago, it is discouraging to see how entrenched the large and established ratings companies remain. Ratings are still used to determine bank capital requirements, and investors rely heavily on them.

Over the years, lawmakers have tried to open up the duopolistic world of ratings agencies to greater competition and, therefore, better performance. Legislation in 2006 encouraged the Securities and Exchange Commission to let new companies into the ratings club. The commission set up the Office of Credit Ratings to register new entrants and to monitor all participants’ activities. Today, 10 credit ratings agencies are recognized by the S.E.C.

But gaining regulatory approval to join the ratings arena is exceedingly burdensome. That, at least, has been the experience of R&R Consulting, a firm with a stable of highly respected credit analysts and an enviable record of having predicted the mortgage mess in 2003.

R&R has been trying to get recognition as a credit rating agency since 2011. Frustrated by what it perceives as roadblocks erected by the S.E.C., its executives are beginning to wonder if the commission really wants increased competition.

The firm was founded in 2000 by Ann Rutledge and Sylvain Raynes, experts in structured finance who previously worked at Moody’s. It is a small shop, with seven employees, but its clients include investors, small and medium-size banks, financial regulators and other institutions. R&R’s specialty is risk measurement for all asset types.

R&R’s approach differs from traditional ratings agencies because, in addition to being able to rate new issues, it analyzes risks in securities that are trading in the secondary, or resale, market, after they are issued. By contrast, S.& P. and Moody’s became known for giving mortgage securities high ratings and downgrading them only when defaults were soaring. 

 “In the primary market, everyone prices a security around the credit rating,” Ms. Rutledge says. “In the secondary market, no one cares about the credit rating; what they want is valuation. We connect primary-market ratings with secondary-market valuations.”

THE R&R distinction between a rating and a valuation, however, seems to pose a problem when it comes to getting S.E.C. approval as a ratings agency, Ms. Rutledge says.

By law, many requirements must be met before a firm can become a ratings agency. Chief among them is that the applicant must provide letters from 10 “qualified institutional buyers” that have used the company’s ratings over the previous three years.

R&R has had difficulties with its letters. One was rejected because its writer identified the firm’s work as ratings or valuations, not simply as ratings, Ms. Rutledge says. Another letter failed to pass muster because it was from a German institution that characterized itself as the equivalent of a qualified institutional buyer. When a foreign institution could not get its letter notarized as required — notaries are not as common overseas — it was not good enough for the S.E.C.

And not all clients want to write such a letter for use by the S.E.C. Instead, some said they would discuss the company’s work by telephone. The S.E.C. rejected the idea.

“It’s extremely difficult for us to satisfy the ‘10 qualified institutional buyers’ requirement,” Ms. Rutledge says. “Proof that you’ve done business with them is not enough; it says you must have letters. And they have a suggested text for the letter. When we changed the text slightly they said it was not in conformity.”

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India Ink: Online Abuse of Teen Girls in Kashmir Leads to Arrests

SRINAGAR —Online abuse and a fatwa aimed at a rock band of Muslim teenage girls in Kashmir have led to arrests and a threat of a lawsuit.

Three men were arrested this week for posting threatening messages on the Facebook page of Praagaash, an amateur rock band in Indian-occupied Kashmir made of up Muslim girls. “The investigation is ongoing,” said Manoj Pandita, spokesman for the Jammu and Kashmir police, indicating that more arrests may follow.

The three men were charged under Section 66A of the Information Technology Act, which applies to “offensive” messages being sent through communication services, and Section 506 of the Ranbir Penal Code, which applies to criminal intimidation. Mr. Pandita said that it had been easy to track the I.P. addresses of the Facebook users.

A prominent human rights lawyer, Parvez Imroz of the Jammu and Kashmir Coalition of Civil Society, is planning to sue the top religious leader in Kashmir, who called for the fatwa, for “demonizing Kashmir before the international community” and for “running a parallel judicial system in the valley.”

Mr. Imroz told India Ink that human rights organizations like his needed support from the international community to highlight their concerns, and such fatwas reflected badly on the Kashmiri society. “He is diverting attention away from real issues of human rights to nonissues like music and purdah,” Mr. Imroz said.

The fatwa against the band was issued by the Grand Mufti Bashiruddin Ahmad.

In his fatwa, Mr. Ahmad advised women to only sing inside the house to other female members of the family, and wear a veil whenever they left the house. “They must stay within limits,” he said.

Following the band’s first live performance in December, Aneeqa Khalid, Noma Nazir and Farah Deeba, 10th-grade students who are 15 and 16 years old, became the target of abuse and threats on Facebook by people who accused them of being un-Islamic because they had performed in public, especially before men. Some commenters called them “sluts” and “prostitutes;” others suggested that they should be raped.

The band Praagaash, which means “darkness into light,” disbanded following a national controversy surrounding these threatening messages. The threats were condemned by many, including the state’s chief minister.

To many Kashmiris, both the fatwa and the arrests by the government are unnecessary. Some say that the controversy erupted after the state’s chief minister, Omar Abdullah, got involved by expressing his support for the band on Twitter and then calling for investigation against those writing the threatening messages.

“Nobody here had a problem with the rock band,” said Aala Fazili, a doctorate student at Kashmir University, pointing out that the band’s performance in December had not led to any protests or physical threats against them.

Mr. Fazili, 32, added that people shouldn’t be arrested for writing abusive posts on Facebook. “You cannot call an abuse a threat,” he said.

Mr. Pandita, the Kashmir police spokesman, said the investigators were making a distinction between a threat and abuse on the basis of “gravity.”

Pranesh Prakash, from the Center for Internet and Society in Bangalore, asked whether people who hold protests calling for the death of the author Salman Rushdie should also be arrested for making threats.

“I would hold that no expression of violent thoughts, online or offline, should be made criminal, even if it is repugnantly misogynistic, unless it takes the form of a credible threat that causes harm, or is harassment that constitutes harm,” he said.

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Super Bowl blackout traced to preventive equipment

NEW ORLEANS (AP) — An electrical device that had been installed expressly to prevent a power outage caused the Super Bowl blackout, the stadium's power company said Friday as it took the blame for the outage that brought the game to a halt for more than a half-hour.

Officials of Entergy New Orleans, a subsidiary of New Orleans-based Entergy Corp., said the device, called a relay, had been installed in switching gear to protect the Superdome from a cable failure between the company's incoming power line and lines that run into the stadium.

The switching gear is housed in a building known as "the vault" near the stadium that receives a line directly from a nearby Entergy power substation. Once the line reaches the vault, it splits into two cables that go into the Superdome.

Company officials said the device performed with no problems during January's Sugar Bowl and other earlier events, but has been removed and will be replaced. All systems at the Superdome are now working and the dome will host a major Mardi Gras event Saturday night, said Doug Thornton, an executive with SMG, the company that manages the stadium for the state.

The power failure at Sunday's big game cut lights to about half of the stadium for 34 minutes, halting play between the Baltimore Ravens and San Francisco 49ers.

The FBI had ruled out cyberterrorism as a cause.

Entergy's announcement came shortly before officials appeared before a committee of the City Council, which is the regulatory body for the company, to answer questions about the outage.

Entergy New Orleans CEO Charles Rice and Dennis Dawsey, an Entergy vice president for distribution, told the Council that SMG agrees the cause of the outage was a relay failure. Asked if the two corporations still plan to hire a third-party investigator, Rice said that possibility remains open.

Committee member Jackie Clarkson pressed for such an independent probe. "We've told the public we're going to have an outside investigation," she said.

"We'll work closely with SMG and if there is a need for a third-party investigation, we will do that," Rice said.

It remains unclear whether the problem with the relay was a design flaw or a manufacturing problem. Rice said Entergy is working with the manufacturer.

"I'm pleased that we were able to find the root cause," Thornton said.

Shabab Mehraeen, an assistant professor of electrical engineering at Louisiana State University, said the relay device is a common electrical fixture in businesses and massive facilities such as the Superdome.

"They are designed to keep a problem they sense from becoming something bigger, like a fire or catastrophic event," said Mehraeen, who holds a doctorate from the Missouri University of Science and Technology in Rolla, Mo.

The devices vary in size, and while Mehraeen noted he was not familiar with the specifics of the relay at the Superdome, he added, "I wouldn't be surprised if it was bigger than a truck."

Mehraeen said the reasons the devices fail are the subject of much academic research into the interaction of relays with the complex electrical systems they regulate.

"It's not unusual for them to have problems," he said. "They can be unpredictable despite national testing standards recommended by manufacturers."

Entergy and SMG had both upgraded lines and equipment in the months leading up to the Super Bowl. Rice said the new switching gear, with the faulty relay, was installed as part of a $4.2 million upgrade by Entergy, including the installation of a new power line dedicated solely to the stadium.

In a separate project, SMG replaced lines coming into the stadium after managers expressed concerns the Superdome might be vulnerable to a power failure like the one that struck Candlestick Park during a 49ers Monday Night Football game in 2011. That outage was blamed at least partly on a transformer explosion.

Thornton stressed Friday that the dome was drawing only about two-thirds of its power capacity Super Bowl night, and said typical NFL games in late August or September can draw a little more.

City officials had worried that the Super Bowl outage might harm New Orleans' chances of getting another NFL championship game.

But NFL Commissioner Roger Goodell downplayed that possibility after the outage, saying the NFL planned to keep New Orleans in its Super Bowl plans. Mayor Mitch Landrieu said the city intends to bid for the Super Bowl in 2018.

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