DealBook: Two Giant Banks, Seen as Immune, Become Targets

Federal prosecutors are nearing criminal charges against some of the world's biggest banks, according to lawyers briefed on the matter, a development that could produce the first guilty plea from a major bank in more than two decades.

In doing so, prosecutors are confronting the popular belief that Wall Street institutions have grown so important to the economy that they cannot be charged. A lack of criminal prosecutions of banks and their leaders fueled a public outcry over the perception that Wall Street giants are "too big to jail."

Addressing those concerns, prosecutors in Washington and New York have met with regulators about how to criminally punish banks without putting them out of business and damaging the economy, interviews with lawyers and records reviewed by The New York Times show.

The new strategy underpins the decision to seek guilty pleas in two of the most advanced investigations: one into Credit Suisse for offering tax shelters to Americans, and the other against France's largest bank, BNP Paribas, over doing business with countries like Sudan that the United States has blacklisted. The approach applies to American banks, though those investigations are at an earlier stage.

In the talks with BNP, which has a huge investment bank in New York, prosecutors in Manhattan and Washington have outlined plans to extract a criminal guilty plea from the bank's parent company, according to the lawyers, who were not authorized to speak publicly. If BNP is unable to negotiate a lesser punishment — the bank has enlisted the support of high-ranking French officials to pressure prosecutors — the case could counter congressional criticism that arose after the British bank HSBC escaped similar charges two years ago.

Such criminal cases hinge on the cooperation of regulators, some who warned that charging HSBC could have prompted the revocation of the bank's charter, the corporate equivalent of the death penalty. Federal guidelines require prosecutors to weigh the broader economic consequences of charging corporations.

With the investigation into BNP, the lawyers briefed on the matter said, prosecutors met in April with the bank's American regulators: the Federal Reserve Bank of New York and Benjamin M. Lawsky, New York's top financial regulator. The prosecutors who attended the meeting and are leading the investigation — Preet Bharara, the United States attorney in Manhattan; David O'Neil, the head of the Justice Department's criminal division in Washington; and Cyrus Vance Jr., the Manhattan district attorney — left largely reassured.

During the meeting at the New York Fed's headquarters in Lower Manhattan, the lawyers said, Mr. Lawsky said he planned to impose steep penalties against BNP and its employees but would not revoke the bank's license. The prosecutors secured similar assurances from the New York Fed, the lawyers said, though the Fed's board in Washington must still approve the decision about BNP, which has not been accused of any wrongdoing.

Depending on the regulator — American and European banks are divided among a patchwork of agencies in New York and Washington — the path to filing charges could still be difficult. While regulators might be philosophically aligned with prosecutors, some feel bound by rules that govern their response to criminal charges. At a meeting last September, a top federal regulator vowed not to interfere if Mr. Bharara obtained a guilty plea from JPMorgan Chase over its ties to Bernard L. Madoff, according to the lawyers and records of the meeting. But the regulator, Thomas J. Curry, a frequent critic of Wall Street, warned that federal law might require him to reconsider JPMorgan's charter if the bank was convicted of a crime.

The discussions with regulators, recounted in interviews with the lawyers and in records obtained through a Freedom of Information Act request, offer a lens into the political and legal minefields that prosecutors navigate when investigating big banks. The interviews also demonstrate that defense lawyers continue to push prosecutors not to act without assurances that regulators will keep a bank in business.

In a recent speech to Wall Street lawyers, Mr. Bharara said this dynamic created a "gaping liability loophole that blameworthy companies are only too willing to exploit."

He noted that regulators often possessed many of the same facts, including emails and documents, that underpin a criminal case. The prosecutors and regulators, he said, need to "work in concert."

His comments echoed concerns that Attorney General Eric H. Holder Jr. raised at a congressional hearing last year, when he said, "I am concerned that the size of some of these institutions becomes so large that it does become difficult for us to prosecute them" amid regulatory concerns that charges could imperil the economy.

The off-the-cuff remarks ignited a debate that reverberated through the Justice Department and the halls of the Capitol. Mr. Holder's concerns also reinforced the popular idea that Wall Street, once considered too big to fail, is now too big to indict.

The idea is born from painful experiences like Arthur Andersen, Enron's accounting firm, which went out of business after a 2002 criminal conviction. In the wake of the firm's collapsing, prosecutors adopted a more cautious approach when punishing big companies, imposing "deferred-prosecution agreements" that suspend charges against corporations in exchange for certain concessions.

Those fears helped shape the case against HSBC, accused of "stunning failures" in preventing money laundering. Prosecutors in Washington, unsure how regulators would respond to a guilty plea, imposed a record fine and a deferred-prosecution agreement.

Mr. Holder and Mr. Bharara are now signaling a change in course.

Mr. Holder's criminal division — which a week after announcing the HSBC case hosted a meeting with regulators to discuss "corporate resolutions," according to records — has held discussions with the New York Fed about securing a guilty plea in the Credit Suisse tax shelter case. While the criminal division might ultimately extract a guilty plea from Credit Suisse's main banking affiliate in Zurich, the lawyers briefed on the matter said, they have not ruled out charges against the bank's parent company. The case is expected to be announced before the action against BNP.

Representatives for BNP and Credit Suisse declined to comment.

Mr. Bharara, the lawyers said, has opened his own criminal investigations into a fraud at Citigroup's Mexican affiliate and other American banks. And in the recent speech, Mr. Bharara warned, "You can expect that before too long a significant financial institution will be charged with a felony or be made to plead guilty to a felony, where the conduct warrants it."

BNP has privately said that the consequences of a guilty plea could be dire. In a final bid for leniency, the lawyers briefed on the matter said, the bank is expected to meet with prosecutors next week in the Justice Department's headquarters in Washington. BNP, which has earmarked $1.1 billion to pay penalties in the case but might pay more, requested the meeting with Mr. O'Neil, Mr. Bharara and Mr. Vance after learning the prosecutors' intentions to force a guilty plea from the bank's parent company. The bank, which would be the biggest financial institution to plead guilty since Drexel Burnham Lambert in 1989, hopes that prosecutors will settle for a guilty plea from a BNP subsidiary.

The investigation into BNP has centered on whether the bank processed transactions for countries — including Sudan and Iran — that the United States government has placed under sanctions. The bank, which conducted its own internal investigation that "identified a significant volume of transactions that could be considered impermissible" between 2002 and 2009, may have improperly routed some money through its New York branches. Prosecutors decided that the conduct warranted more than a deferred-prosecution agreement. But leery of spurring a run on the bank, the prosecutors turned to regulators for assurances — which were largely provided at the April 18 meeting at the New York Fed.

Still, to be meaningful, a guilty plea would require some consequences. Mr. Lawsky told prosecutors that he would consider temporarily suspending the bank's ability to transfer money through New York branches on behalf of foreign clients, a move that could undercut the bank's revenue.

A spokesman for Mr. Lawsky declined to comment, as did the spokesmen for Mr. Bharara, Mr. Curry and Mr. O'Neil. The Fed and Mr. Vance's office also declined to comment.

In other cases, Mr. Bharara reached an impasse with regulators.

He first met with Mr. Curry, the Comptroller of the Currency, in September 2012 to discuss the potential fallout from criminal charges, records show. A year later, as Mr. Bharara's investigation into JPMorgan's business with Mr. Madoff was heating up, he made another visit to the regulator.

Joined by his top lieutenants — Lorin L. Reisner, Joon Kim and Richard B. Zabel — Mr. Bharara sought to clarify the potential repercussions of a JPMorgan guilty plea, according to the meeting records. Mr. Curry, flanked by his own top aides, Paul Nash and Daniel Stipano, was sympathetic to the dilemma.

But Mr. Curry stopped short of promising that JPMorgan's charter would be safe. He pointed to a federal law that requires the Comptroller's office to hold a hearing about potentially terminating "all rights, privileges and franchises of the bank." Ultimately, JPMorgan received a roughly $2 billion penalty from Mr. Curry and Mr. Bharara, but did not have to plead guilty.

Moving forward, Mr. Bharara is exploring ways around the automatic hearing, which applies only to money laundering convictions. Other charges, including wire fraud, do not automatically require a hearing.

"The revocation of a charter amounts to a death sentence for a bank," said Daniel Levy, a former prosecutor in Mr. Bharara's office, who is now a principal at McKool Smith. "Any rational prosecutor would want to know the consequences of a charge, if possible in advance."

A version of this article appears in print on 04/30/2014, on page A1 of the NewYork edition with the headline: Two Giant Banks, Seen as Immune, Become Targets .

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DealBook News Analysis: Bank of America’s Bad Accounting

The strange accounting that tripped up Bank of America is on its way to being changed.

That accounting rule, which has been around since 2007, has vexed investors in financial institutions ever since it began to be applied. The banks greatly enjoyed it at first because it had the seemingly perverse result of increasing their reported profits — or at least reducing their reported losses — at a time when the banks seemed to be in dire straits in 2008 and 2009.

Since then, the banks have liked it less because it reduced profits as their chances of survival appeared to increase.

The rule has provoked a lot of criticism about how ludicrous accounting results could be, and the people who write the standards have been moving to change the rule. Just last week, the Financial Accounting Standards Board tentatively agreed, on a 5-to-2 vote, to end that practice at a date to be determined.

People should not hold their breath. Changes in accounting rules happen at a glacial pace. The board has been discussing this change since 2010.

Had the expected new rule been in effect, it appears that Bank of America could not have made the mistake that was disclosed on Monday — a mistake that forced it to withdraw its capital plan submitted to the Federal Reserve and suspend a planned dividend increase and share buyback.

The existing rule applies to companies that adopt what is known as the "fair value option" for financial assets and liabilities. In practice, that mostly means large banks.

Under the rule, they mark certain assets and liabilities to market value each quarter and reflect the net change in their income statements.

That made sense when it was originally adopted in 2006, when the quality of bank credit was generally taken for granted. If a bank issued a bond that matured in 10 years and at the same time made a 10-year loan at a fixed interest rate, marking the asset — the loan — to current value might make no sense unless the value of the liability — the bond — was also changed. If interest rates rose, the market value of the loan would fall. Should that lead to a loss? No, because the value of the bond would also fall.

Then Lehman Brothers failed, and suddenly the assumption of unvarying credit quality among large banks no longer made any sense.

The result was that in 2008 and 2009, the market value of bonds issued by big banks fell, and their reported profits were increased. Then in 2010 and later, the banks appeared to be in better shape, and the market value of their bonds rose. That cut reported profits.

Bank regulators understood that — whatever the accounting rationale — it made no sense to raise or lower a bank's profits because its credit standing had changed. Banks would ultimately pay their liabilities in full or they would fail. So the regulators told the banks to disregard those adjustments in calculating capital. And Bank of America did that.

The bank said on Monday that while it got the net earnings right every year, it mishandled the adjustments to its capital.

And how did it err? It says that it properly raised its reported capital levels to offset the reported loss caused by unrealized changes in the valuation of the securities it had issued. But it also raised the capital levels to offset losses that had been realized, something it should not have done. The realized changes came when securities issued by the bank were paid at maturity or repurchased at an earlier date.

That mistake improperly increased its reported capital.

Bank of America did not explain how that the error came to happen or how it was repeated year after year. Nor did it explain why the error was discovered when the first-quarter financial statements for this year were being prepared.

The securities in question were complicated ones, known as structured notes. They were originally issued by Merrill Lynch before Bank of America bought the brokerage firm in 2009, during the financial crisis. Those notes had what is called an "embedded derivative," which means their eventual value at maturity would vary based on the performance of something else, perhaps a currency or a commodity or a stock index.

Under the current rules, any change in value because of a move in the underlying security — say a stock index — should be reflected in both earnings and capital. So should a change in value caused by changes in market interest rates. But the change in value caused by a change in the credit standing of Bank of America should be reflected only in earnings, not in capital.

If the change in rules tentatively endorsed by the F.A.S.B. were in effect, the latter change would no longer be reflected in earnings. So no adjustment would need to be made in calculating capital levels.

It is clear that Bank of America management should have caught the error. But it is less clear who else should have caught it. It was contained in the bank's submission to the Fed regarding stress tests, which the Fed said it carefully reviewed. A Fed spokeswoman declined to comment, but it perhaps should be noted that the submissions contained thousands of numbers, not all of which could be checked.

Bank of America's auditor, PricewaterhouseCoopers, also declined to comment. It is responsible for auditing the company's financial statements, which the bank says were correct, at least so far as the income and balance sheets go. But the company's 10-K annual report, which carried the auditor's letter of approval, also included a footnote regarding capital levels, which the bank now says were incorrect. One measure of capital was reported at $161.5 billion, when it should have been $157.7 billion. Auditors are supposed to review such footnotes, but either number showed the bank to be more than adequately capitalized, and it could be argued that the difference was immaterial to investors.

It was not, however, immaterial to the Fed, which forced the bank to revise its capital plan. And that fact was clearly material to investors. Bank of America stock lost 6.3 percent of its value on Monday, shaving more than $10 billion off the company's market capitalization.

It will be interesting to learn, if we can, just how the error was caught this year. It might be even more interesting to know which bank officials were supposed to review the calculations, and failed to do so, year after year.

A version of this article appears in print on 04/29/2014, on page B4 of the NewYork edition with the headline: Bank of America's Bad Accounting.

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DealBook: Pfizer Proposes a Marriage With AstraZeneca, Easing Taxes in a Move to Britain

Pfizer, the maker of best-selling drugs like Lipitor and Viagra and a symbol of business prowess in the United States for more than a century, no longer wants to be an American company.

On Monday, Pfizer proposed a $99 billion acquisition of its British rival AstraZeneca that would allow it to reincorporate in Britain. Doing so would allow Pfizer to escape the United States corporate tax rate and tap into a mountain of cash trapped overseas, saving it billions of dollars each year and making the company more competitive with other global drug makers.

A deal — which would be the biggest in the drug industry in more than a decade — may ultimately not be done. AstraZeneca said on Monday that it had rebuffed Pfizer, after first turning down the company in January. Nonetheless, the pursuit by Pfizer, founded in a redbrick building in Brooklyn in 1849, has made it clear that the company wishes to effectively renounce its United States citizenship.

Pfizer points out that it would retain its corporate headquarters here and remain listed on the New York Stock Exchange. It also says that the main rationale for the deal is broadening its portfolio of drugs, and saving money through combined operations with AstraZeneca.

Still, a deal would allow it to follow dozens of other large American companies that have already reincorporated abroad through acquiring foreign businesses. They have been drawn to countries like Ireland and the Netherlands that have lower corporate rates, as well as by the ability to spend their overseas cash without being highly taxed.

At least 50 American companies have completed mergers that allowed them to reincorporate in another country, and nearly half of those deals have taken place in the last two years.

But Pfizer is now the largest and best-known of them to try to expatriate.

"Pfizer is the Coca-Cola of health care. It's as American as apple pie," said Mark Schoenebaum, an analyst with the ISI Group. "If there is a deal that is going to start a real dialogue in Washington, it might be a company like this."

On Monday, some lawmakers on Capitol Hill expressed frustration over such corporate moves.

"It is a real problem when the tax code provides an incentive for U.S.-based companies to move overseas, often times taking good jobs with them," said Representative David Camp, the Republican Michigan who is chairman of the House Ways and Means Committee.

Senator Charles E. Grassley, Republican of Iowa, said, "Until we can reform our tax code so we have a more globally competitive system, businesses will seek ways to limit their taxes in the United States in favor of foreign tax systems."

Recent proposals from Mr. Camp and the previous chairman of Senate Finance Committee, Senator Max Baucus, Democrat of Montana, have taken aim at such deals. President Obama's 2015 budget proposal included language that would effectively ban them. By acting now, Pfizer is betting that it can complete a merger to reduce its taxes before any push to change the laws gathers steam.

There are several benefits of being effectively a British company. Pfizer currently pays an effective tax rate of 27 percent. Though it did not specify what the new rate might be, the British corporate tax rate is currently 21 percent and will soon fall to 20 percent.

Analysts at Barclays estimated that for each percentage point less Pfizer paid in taxes, it would save about $200 million a year by reincorporating. People briefed on Pfizer's discussions said that figure could be substantially higher. That means that Pfizer would be saving at least $1 billion a year in taxes alone.

And moving to a lower-tax jurisdiction would allow Pfizer to tap cash that it holds overseas without paying a steep tax to bring it back to the United States. Of the company's $49 billion in cash, some 70 to 90 percent of that is estimated to be held overseas. That would help pay for part of the takeover by Pfizer. By using those assets to buy a foreign company, the drug maker would avoid racking up the sort of big tax bill that would come from buying a domestic rival like Bristol-Myers Squibb.

Pfizer's offer for AstraZeneca, composed of cash and stock, was valued at 46.61 pounds a share ($78.37), roughly 30 percent above where the British company was trading at the beginning of the year.

And being based in a country with a lower tax rate would allow Pfizer to be more aggressive in acquiring other companies. On a call with analysts on Monday, Pfizer's chief executive, Ian C. Read, a Briton, said Pfizer found it was hard to compete with other acquirers while saddled with "an uncompetitive tax rate."

Still, he added that even as a reincorporated British company, "we will continue to pay tax bills" in the United States.

The chief executive said that it was his responsibility "to maximize return to shareholders, and I don't actually see that that conflicts with the interest of the U.S. government."

American businesses have long complained about the corporate tax rate, arguing that in today's global marketplace, they are left at a competitive disadvantage.

Many companies aggressively seek loopholes that lower their actual tax rates well below the 35 percent statutory rate. Some choose to reincorporate abroad.

Last year, several American drug makers, including Perrigo, from Allegan, Mich.; Actavis, from Parsippany, N.J.; and Endo Health Solutions, from Malvern, Pa., acquired foreign companies and began the process of moving overseas.

The result will be hundreds of millions of annual tax savings for the companies, and an equivalent amount of money lost to the United States Treasury.

The law allows companies to move overseas if, after a merger or acquisition, foreign shareholders own more than 20 percent of the company.

The rush of such deals, known as inversions, helped push deal activity to heights unseen since before the financial crisis of 2008. On April 22 alone, drug makers announced $74 billion worth of potential deals, including the potential takeover of the maker of Botox and a complicated series of asset swaps between Novartis of Switzerland and GlaxoSmithKline of Britain.

But Pfizer would be by far the best-known company to try such a deal.

"This would be one of the largest tax inversions, if not the largest, in more than 30 years of such transactions, and as an aside, could again reignite calls for U.S. corporate tax reform," said Alex Arfaei, an analyst at BMO Capital Markets.

For Pfizer, there are other motivations, besides taxes. AstraZeneca makes an attractive target because of its portfolio of cancer drugs, an area that Pfizer has also made a priority as it seeks to restock its product pipeline.

Sales of many of Pfizer's top-selling products, such as the pain drugs Celebrex and Lyrica, are expected to fall rapidly over the next few years because the drugs will lose their patent protection and enter into competition with cheaper generic versions.

Mr. Read said a combined company would save money and would be able to invest more in research, especially in cancer treatments, that each company could not achieve on its own. One example could be in creating combination therapies, or drug cocktails, to treat cancer in the same way that such drugs have revolutionized treatment of patients with H.I.V.

While obstacles to completing a merger remain, shares of Pfizer surged 4.2 percent on Monday, signaling investor appetite for such a deal. And Mr. Read of Pfizer said he would continue to pursue AstraZeneca.

"We've never had a company of this size and stature do an inversion," said Robert Willens, an independent corporate tax adviser. "It may be that this is the transaction that creates a lot of controversy and calls so much attention to the technique that the legislators get involved and rein these transactions in."

On Monday, Mr. Read acknowledged as much, saying, "At some point the U.S. government will need to deal with how to make global companies competitive from the U.S."

Katie Thomas contributed reporting.

A version of this article appears in print on 04/29/2014, on page A1 of the NewYork edition with the headline: Pfizer Proposes a Marriage and a Move to Britain, Easing Taxes .

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DealBook: Pfizer Said to Continue Pursuing AstraZeneca

Pfizer is close to publicly unveiling its interest in acquiring AstraZeneca of Britain, a person briefed on the matter said on Sunday, in what would be one of the biggest in an already swelling series of deal efforts among drug makers.

Such a deal would likely be worth more than $100 billion, given AstraZeneca's current market capitalization of roughly $86 billion. That would make it one of the largest-ever acquisition efforts in the pharmaceutical industry, surpassing Pfizer's $90 billion takeover of Warner-Lambert 14 years ago.

Pfizer could declare its interest in taking over its rival within days, this person said. Such a move would be aimed at putting pressure on the British drug maker, which has turned down a number of informal takeover approaches from its competitor, including in recent months.

The pharmaceutical industry has helped push deal activity to heights unseen since before the financial crisis of 2008. On April 22 alone, drug makers unveiled $74 billion worth of potential deals, including the potential takeover of the maker of Botox and a complicated series of asset swaps between Novartis of Switzerland and GlaxoSmithKline of Britain.

These companies have been driven to deals in many cases to find new areas of growth as onetime blockbuster treatments lose patent protection. Instead of pouring money into researching new products that could sputter out, they are looking to buy more what they hope are likely winners.

To Pfizer, AstraZeneca may be attractive because of its portfolio of cancer drugs, an area that the American company has also made a priority as it seeks to restock its product pipeline.

A takeover bid for the British company would also let Pfizer use some of the cash that it keeps abroad without incurring a big tax bill. The company has disclosed holding about $69 billion in earnings from international subsidiaries as of Dec. 31.

But the board of AstraZeneca had viewed the previous approaches as opportunistic and ill timed, with too small a takeover premium, according to a person briefed on those discussions. The British drug maker has tried to improve its fortunes on its own, trying to reverse declines in sales and profits because of the loss of patent protection on some of its best-selling treatments and setbacks in developing new drugs.

News of Pfizer's intentions was reported earlier by The Financial Times.

A version of this article appears in print on 04/28/2014, on page B4 of the NewYork edition with the headline: Pfizer Move for AstraZeneca Seen.

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ArtsBeat: Rare Encore at the Met as Mexican Tenor Stirs Crowd

There was a time, early in the 20th Century, when programs at the Metropolitan Opera warned fanatical opera buffs, in capital letters, "POSITIVELY NO ENCORES ALLOWED."

The rule has since been relaxed only a handful of times in recent decades. But on Friday night the Mexican tenor Javier Camarena joined the small coterie of opera singers who have literally stopped the show at the Met when he got such a thunderous ovation in Rossini's "La Cenerentola" that he was compelled to give an encore of his bravura aria "Si, ritrovarla io guiro."

The only other two singers to have sung encores during Met performances in more than half a century, by the opera house's count, were Luciano Pavarotti, who sang one during a performance of Puccini's "Tosca" in 1994, and the man Mr. Camarena was filling in for on Friday night: the star bel canto tenor Juan Diego Flórez, who sang an encore in a 2008 performance of "La Fille du Régiment" and in a 2012 performance of "L'Elisir d'Amore."

"My God, it's so exciting," a beaming Mr. Camerena said, slightly out of breath, in a brief interview backstage after the performance ended. "To feel this reaction from the public — it was like a big mountain of roars and bravos and applause. It's really overwhelming. Fantastic."

It was quite a feat for a stand-in. His role, playing the the prince opposite Joyce DiDonato's star turn as Cinderella, was originally to have been sung by Mr. Flórez, who announced earlier this month that he would withdraw from the first few performances due to illness. Mr. Camarena, who had just had a triumph at the Met in Bellini's "La Sonnambula," agreed to step in.

He got rave reviews. Anthony Tommasini of The New York Times singled out his singing of the second act aria, writing that Mr. Camarena "dispatched the aria's impetuous runs — capped by thrilling top notes, including an effortless high D — finally finishing with a glorious high C that he seemed almost reluctant to cut off." He wrote that the opening night ovation lasted so long that he expected Mr. Camarena to return for a bow, but he did not.
On Friday night, the ovation was again tumultuous, with several members of the audience jumping to their feet – which is unusual, mid-performance.

Mr. Camarena, who had exited the stage as the ovation continued, said: "I was waiting, because last time, there was very long applause, and I was behind the stage and was trying to think, what do I do? Do I come back, or stay? What's going to happen?"

This time, he came out again, and not only bowed but repeated the second part of the aria, hitting another high D.

Now, given Mr. Camarena's reception, there may be suspense about whether Mr. Flórez will return, as scheduled, to sing the three final performances of the opera, including a May 10 matinee that will be transmitted to movie theaters around the world as part of the Met's "Live in HD" series.

Mr. Camarena is currently only scheduled to sing the role one more time, on Monday night.

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ArtsBeat: ‘Zero Motivation’ and ‘Point and Shoot’ Take Top Prizes at Tribeca Film Festival

Military-themed films won top prizes at this year's Tribeca Film Festival, which announced its awards Thursday night: "Zero Motivation," which depicts the trials and tedium endured by a unit of young female Israeli soldiers, won best narrative film, and "Point and Shoot," wherein an American filmmaker records his foray into the Libyan civil war, was named best documentary. 

Tribeca Film Festival

Features, news, videos and more from the festival.

Valeria Bruni Tedeschi – an Italian-French actress and older sister to Carla Bruni – was named best actress for her work in "Human Capital." And Paul Schneider won best actor for his lead role in "Goodbye to All That," a tale about a divorced father seeking love that was written and directed by Angus MacLachlan, who wrote the 2005 film "Junebug." The acting awards carried a $2,500 prize and the winning filmmakers garnered $25,000 each.

A version of this article appears in print on 04/25/2014, on page C4 of the NewYork edition with the headline: Prizes Awarded at Tribeca Film Festival.

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DealBook: Appeal Judges Hint at Doubts in Insider Case

Updated, 9:02 p.m. | Preet Bharara's perfect record, 80 insider trading convictions without a single defeat, is in jeopardy.

The United States Court of Appeals in Manhattan on Tuesday picked apart the government's case against two former hedge fund traders, Todd Newman and Anthony Chiasson, questioning whether the judge in the trial erred when instructing jurors. In an hourlong hearing, a three-judge panel hinted that it might overturn the convictions, the first real threat to Mr. Bharara's sweeping campaign as a United States attorney to root out insider trading on Wall Street.

The prosecutor arguing the appeal for Mr. Bharara was on the defensive from the start. Before Antonia M. Apps even finished a sentence of her presentation, the appellate panel implied that Mr. Bharara's office had steered some insider trading trials to Judge Richard J. Sullivan, a lower-court judge in Manhattan. Judge Barrington D. Parker of the appeals court, interrupting Ms. Apps, referred to Judge Sullivan as the government's apparent "preferred venue" for insider trading cases. While Ms. Apps argued that consolidating the cases created "judicial efficiencies," Judge Ralph K. Winter noted the "sheer coincidence that the judge who bought into the government's theory" oversaw the recent trials.

It is not every day that Mr. Bharara's office is challenged over its Wall Street crackdown. Mr. Bharara, a 45-year-old former aide to Senator Charles E. Schumer, Democrat of New York, has seen his celebrity status rise with every case against a big bank or hedge fund. As his profile grew, Mr. Bharara appeared on the cover of Time magazine and fielded speculation about a run for public office. Even Bruce Springsteen — Mr. Bharara is a big fan — name-checked him at a concert.

A judicial chiding here or there will not slow his momentum, and legal experts said the appellate court could very well uphold the insider trading convictions. A reversal, however, might undercut one of his greatest achievements.

The appeal by Mr. Chiasson and Mr. Newman, which could take months to decide, has captivated the white-collar bar. A victory for Mr. Chiasson and Mr. Newman would offer a blueprint for traders to defend future insider trading cases and would imperil at least one other milestone conviction: Michael Steinberg, of SAC Capital Advisors, the once-giant hedge fund that Mr. Bharara indicted last year. When Judge Sullivan presided over Mr. Steinberg's trial late last year, he provided a jury instruction similar to the one for the trial involving Mr. Chiasson and Mr. Newman.

Unlike other judges, Judge Sullivan did not require jurors to conclude that Mr. Newman and Mr. Chiasson had known a critical detail when trading: that insiders were improperly leaking confidential information in exchange for some "personal benefit." Judge Sullivan's instructions, the defense lawyers contended, ran afoul of a 30-year-old United States Supreme Court ruling that helped define insider trading.

"Judge Sullivan left a piece out of the equation," Mark F. Pomerantz, a lawyer at Paul, Weiss, Rifkind, Wharton & Garrison who argued the appeal for Mr. Chiasson, told the panel. Mr. Pomerantz, who is working alongside Alexandra Shapiro and Mr. Chaisson's trial lawyer, Gregory Morvillo, likened the case to the government claiming that there was an egg salad sandwich without proving that there were any eggs.

The argument appeared to strike a chord with the judges, whose persistent questioning of Ms. Apps contrasted with their scant interruptions of Mr. Chiasson's and Mr. Newman's lawyers. When the hearing ended, lawyers filed out of the courtroom buzzing about the prospect of the panel overturning the convictions.

But the appeal before the panel, which also included Judge Peter W. Hall, is hardly a foregone conclusion. It is unclear whether the United States Court of Appeals for the Second Circuit, a court known for siding with the government, will take the rare step of narrowing what constitutes insider trading. A panel's questioning in oral arguments does not always foreshadow the ruling.

To sow some doubt about the appeal, Ms. Apps pointed in the oral arguments to other cases that support Judge Sullivan's jury instruction. And even if the appellate court takes issue with the technicalities of the instruction, Ms. Apps said, the error was "harmless," given the overwhelming weight of evidence presented at trial that Mr. Chiasson and Mr. Newman knowingly traded on confidential information.

After a five-week trial in late 2012, a jury convicted Mr. Newman and Mr. Chiasson of participating in what prosecutors called a "circle of greed" that generated roughly $70 million in illicit gains. Judge Sullivan sentenced Mr. Newman, 49, to four and a half years in prison, while Mr. Chiasson, 40, received a six-and-a-half-year sentence. The appellate court allowed both defendants to remain free on bail while awaiting the outcome of their appeal.

Like Mr. Steinberg at SAC Capital, Mr. Newman and Mr. Chiasson were far removed from insider leaks at two technology companies, Dell and Nvidia. Prosecutors placed them at the end of a four- or five-person chain of information that started with insiders at Dell and Nvidia and wound its way through a network of traders.

At Dell, the leaks came from Rob Ray, an employee in the computer maker's investor relations department. Mr. Ray shared advance earnings information with a former colleague, Sandeep Goyal, who in turn passed the tips on to two analysts who worked with Mr. Chiasson and Mr. Newman at their respective hedge funds, Level Global Investors and Diamondback Capital Management. Mr. Goyal and the analysts — who socialized in Manhattan and the Hamptons — later pleaded guilty and cooperated with the government.

Prosecutors never charged Mr. Ray, although insider trading cases require proof that someone like him wrongfully disclosed secret information in a breach of a duty to his company. Stephen Fishbein, a partner at Shearman & Sterling who is representing Mr. Newman, theorized that Mr. Ray was not charged "because there is not sufficient evidence of a breach or a benefit."

The appeal also hinges on what the Supreme Court intended in a 1983 ruling, Dirks v. the Securities and Exchange Commission, that said a person could be guilty of insider trading only if he knew that the corporate insider leaking the information was breaching a duty to the company. When defining a breach, the court explained that "the test is whether the insider personally will benefit," adding, "Absent some personal gain, there has been no breach of duty."

For Mr. Ray, the gain was subtle: career advice from Mr. Goyal.

At the hearing, defense lawyers argued that Judge Sullivan's instructions had tainted the verdict because he permitted the jurors to convict Mr. Chiasson and Mr. Newman without finding that the men knew of any quid pro quo. Mr. Newman and Mr. Chiasson were unaware that Mr. Ray received career advice from Mr. Goyal.

The argument gained traction among defense lawyers. Before the hearing on Tuesday, the National Association of Criminal Defense Lawyers filed a supporting legal brief warning that the convictions would have a chilling effect on Wall Street analysts gathering information.

The appellate judges seized on the vague nature of what constituted a personal benefit. Judge Parker questioned the "amorphous theory" underpinning some of the government's case, noting that an air of uncertainty hung over Wall Street without a "bright line" to clarify what constituted illegal trading.

Judge Parker also wondered how career advice could amount to a personal benefit. To illustrate his point, Judge Parker questioned whether Ms. Apps would consider a hypothetical suggestion that she stand closer to the courtroom microphone a beneficial piece of advice.

Unfazed, Ms. Apps quipped in reply: "I'm not sure that's good career advice," prompting an uproar of laughter in the courtroom.

Despite the apparent skepticism of the panel, some legal experts said that the prosecution still had a good case. Alafair S. Burke, a professor of criminal law at Hofstra University School of Law, said that the defense lawyers had misinterpreted the ruling in Dirks v. S.E.C. and that a tougher jury instruction would place "too high a burden on the government."

Underscoring the importance of the appeal, Mr. Bharara's top lieutenants attended the hearing: Richard B. Zabel, Lorin L. Reisner and Joon Kim grabbed seats in an overflow room next to the courtroom. Nearby was David Chaves, an F.B.I. agent who supervised the investigations.

With their freedom at stake, Mr. Newman and Mr. Chiasson both attended the hearing. Mr. Chiasson sat next to his wife.

When Ms. Apps exited the courtroom, she flashed a smile. Despite the interrogation, two of the judges applauded her performance, saying she had done just "fine" under pressure.

A version of this article appears in print on 04/23/2014, on page A1 of the NewYork edition with the headline: Appeal Judges Hint at Doubts In Insider Case .

13.07 | 0 komentar | Read More

Lens Blog: New York Times Wins Two Photography Pulitzers

The New York Times has swept the 2014 Pulitzer Prizes for photography. The staff photographer Tyler Hicks won the 2014 Pulitzer Prize in breaking news photography for his coverage of a terrorist attack at an upscale mall in Nairobi, Kenya, that left more than 60 people dead. Josh Haner was awarded the Pulitzer in feature photography for his images of the slow and painful recovery process for a survivor of the Boston Marathon bombing.

The announcement was made on Monday by Columbia University, which bestows the awards.

"For me it's a symbol of what we do at the newspaper as a whole — the best of foreign reporting and the best of our enterprise," said Michele McNally, the paper's assistant managing editor for photography. "It is recognition that our photojournalism is on par with the quality of The New York Times's reporting, which is the best in the world."

This is the second time that the Times has won both Pulitzer photography prizes in the same year. In 2002 The Times won in breaking news for a portfolio of work by 15 photographers who covered the events of Sept. 11, 2001, and the feature award for five photographers' work in Pakistan and Afghanistan after those attacks.

Showcase

Tyler Hicks

A look back on Mr. Hicks's work on Lens.

Mr. Hicks was part of a Times team that won the 2009 Pulitzer for international reporting from Afghanistan and Pakistan. He has won numerous international awards, including Newspaper Photographer of the Year from Pictures of the Year International in 2006.

"Though Tyler has never won an individual Pulitzer before, in my mind he's won it every year," Ms. McNally said. "This is the culmination of all the work he's ever done for this paper. It is well deserved."

Mr. Hicks said, "It's a huge honor to be recognized in this way, and it's a reminder to me that these stories, however far away and however remote, are being noticed and that the risks that photographers all over the world take in going to dangerous places are being acknowledged and rewarded."

Mr. Hicks was born in Brazil and raised in Westport, Conn. He worked at The Troy Daily News in Ohio, where he was hired by Chris Hondros, who died in April 2011 while photographing in Libya. Mr. Hicks, 44, also worked at The Wilmington Morning Star in North Carolina.

He lives in Nairobi and was just blocks from the mall when the attack started. As it unfolded, he went inside with security forces as they searched for the attackers. In an interview with Lens later that day Mr. Hicks — who has covered the Afghanistan and Iraq wars and was among four Times journalists abducted and brutalized in Libya in 2011 — described the scene.

"I could see that there were multiple bodies lying dead in the mall, some lying together just next to where they were having lunch at a cafe," he said. "It seemed everywhere you turned there was another body."

Showcase

Josh Haner

A look back at Mr. Haner's work on Lens.

He said that an attack like the one in Nairobi was at least as dangerous, if not more so, than covering the Afghan war and that inside the mall he had to think about where he was standing, what to cover and the type of obstacles to place between him and the gunmen.

"This is just plain and simple murder of unarmed civilians," said Mr. Hicks, who has covered many violent conflicts in his career, including Kosovo, Iraq, Afghanistan, Somalia and Sudan. "It's not a war. These militants went into the mall and executed people: women and children, anyone who got in their path. That's not typical of war."

Mr. Hicks passes the mall, now bullet ridden and boarded up, almost every day. Each time, he says, it brings back memories of the attack. Events like this attract global attention for a short while and then are often forgotten by most people, he said.

He chooses to remember as much as he can.

"I don't believe that it's better to forget, after you volunteer to go and cover conflict or enter the Westgate Mall during a terrorist attack — you're committing to that experience," he said. "I think it would be disrespectful to the people you've photographed suffering in terrible circumstances to tuck those memories away and ignore them. You owe it to each person to not forget what happened. Once you have witnessed these events then they are part of you, they are a part of who you are."

Mr. Haner, 34, won the feature Pulitzer for his photographs of Jeff Bauman, who lost both legs in the Boston Marathon bombing. Mr. Haner followed Mr. Bauman, 28, over the course of two and a half months, documenting his struggles and private moments with his family and girlfriend.

Mr. Bauman was at the marathon to cheer on his girlfriend, Erin Hurley, when the bombs went off. A graphic photo of him being pushed in a wheelchair chair moments after the explosions, taken by Charles Krupa of The Associated Press, became one of the most widely published images from that day.

Mr. Haner arrived in Boston that evening to cover the aftermath, and over the next few days he worked with, among others, the reporter Tim Rohan, who had recently finished an internship at The Times.

Mr. Rohan, 24, connected with the Bauman family and wrote "Beyond the Finish Line," which detailed Mr. Bauman's recovery. Together the journalists spent a lot of time with Mr. Bauman, at times playing video games with him when he was without other visitors.

In an interview with the Nieman Storyboard site last year, Mr. Rohan described what happened when Mr. Haner started photographing the story.

"After the first week and a half our photographer, Josh Haner, joined in, and he fit like a glove," Mr. Rohan said. "Everyone loves Josh, so when he came in he made the atmosphere lighthearted. It was a good mix of people. That really was important, to keep Jeff at ease."

Witnessing Mr. Baumann's painful recovery was difficult for Mr. Haner.

"The most important thing I learned was when to not take a picture — knowing that there were certain moments to be respected and just let the moment stand on its own without the interruption of a click," he said. "It's knowing when a picture is exploitative and when it's necessary for the story."

Mr. Haner also shot video daily, often carrying four DSLR's — two equipped specifically for video and the other two for stills. A video produced by Mr. Haner, Catherine Spangler and Mr. Rohan won a first-place award in the Best of Photojournalism contest and a second place in Picture of the Year International for feature multimedia story.

Like Mr. Hicks, Mr. Haner also spoke about the length of the public's memories.

"My concern is that people forget tragedies like this," he said. "It's important to bring attention to what survivors are going through and how their lives change, and help them."

Ms. McNally brought Mr. Haner to The Times in 2004 after he had worked for her at Fortune magazine for a year. He was a co-founder of the Lens blog in 2009. He is currently a staff photographer and the senior editor for photo technology.

Among his many contributions to the use and display of photos at The Times is developing a backpack-size transmission device that allows images from major events to be sent instantaneously and posted online within minutes. He has carefully guarded his technological advances from competitors.

Mr. Haner started photographing when he was 10 and immersed himself in photography at the free Harvey Milk Community Darkroom in San Francisco while in elementary school. In 1995, at the age of 15, he started interning with the company that made the "Day in The Life" series of photo books, where he met Ms. McNally as well as the Times deputy photo editor Meaghan Looram.

At Stanford University he studied symbolic systems, which combines computer science, philosophy, psychology and linguistics, and was also the photo editor for the school newspaper. After graduation, he moved into a trailer park for five months for a documentary photo project, then went to work with Ms. McNally at Fortune.

"I hired Josh when he was 23, and at The Times I reconfigured his job from photo editor to technology editor to staff photographer," she said. "He is brilliant and can do anything."

Like playing third base in a mostly Dominican baseball league. He played a doubleheader on Saturday in the Bronx with his team, the Downtown Bulls.

Mr. Haner submitted the project for the feature photography Pulitzer. He said that he understood that deciding what to submit was a difficult decision for The Times, particularly with so much good work done at the paper this year. At first he was not thinking of entering himself, but friends pushed him to do so.

"I felt so passionately about this story and I felt that it was the best work I'd ever done and I did not want to have regrets haunting me in the future," he said.

Today, standing before his colleagues in the newsroom, he reached a spot he had dreamed of as a child in the Bay area.

"It's what I wanted my whole life since I picked up the camera and was reading all the credits in the San Francisco Chronicle and was trying to figure out who all these photgraphers were and hoping one day to be among them," he said.

Today, he was.

---

The complete slide show for both Mr. Haner and Mr. Hicks's winning entries have been published on The New York Times.

Follow @joshhaner, @TylerHicksPhoto, @JamesEstrin and @nytimesphoto on Twitter. Lens is also on Facebook.

13.07 | 0 komentar | Read More

DealBook: Capturing on Canvas the Downfall of Wall Street’s Criminals

Slide Show

Bernard L. Madoff was handcuffed and whisked into a cell. Michael R. Milken, head in palm, wept. Martha Stewart simply stared straight ahead.

If not for one person, these moments might be lost to memory. But when the mighty stumble, the court illustrator captures it forever. For Elizabeth Williams, who has spent more than three decades depicting criminals in court through her drawings, the job is a study of character.

Ms. Williams has covered the trials of terrorists and murderers, but she finds white-collar criminals the most fascinating. "I think it's the greatest soap opera there ever was," she said.

Ms. Williams has drawn notorious Wall Street criminals, including Ivan F. Boesky, one of the world's most powerful financiers in the 1980s, who was convicted of masterminding Wall Street's biggest insider trading scandal at the time, and Raj Rajaratnam, the hedge fund manager and Sri Lanka's richest man, who was at the heart of a network of insider traders in the 2000s.

"To get so far in life, you'd think these fellows have to be really smart — and then they do these things that completely defy what they are about," Ms. Williams said.

Her drawings are often the only recorded images from these trials. Federal courtrooms are one of the few places left where, until recently, cameras were not allowed. A few courts have experimented with allowing cameras, but most trials remain closed to photographers.

Together with Sue Russell, Ms. Williams has written "The Illustrated Courtroom: 50 Years of Court Art," which brings together the work of five courtroom illustrators who chronicled famous trials of the last half-century, including those of David Berkowitz, the so-called Son of Sam; Charles Manson; the Watergate burglars; and O. J. Simpson. The artists — Howard Brodie, Aggie Kenny, Bill Robles, Richard Tomlinson and Ms. Williams — have brought financial chieftains, psychopaths and petty criminals to life for the world outside the courtroom. Some of their work from the book will be on display at the World Trade Art Gallery in Manhattan from April 22 to April 29.

Ms. Williams started her career as a fashion illustrator, working for Hollywood designers like Michael Travis, who made Liberace's feather capes. The work paid little, and she soon turned to court sketching at the suggestion of a teacher. In a chance meeting, Ms. Williams met Mr. Robles, already a well-known courtroom illustrator, at a trial and he gave her the introduction she needed.

The Wall Street soap opera witnessed by Ms. Williams over the years has been filled with a colorful cast of defendants, including beauty queens, domestic divas and presumed upstanding community leaders. Consider Danielle Chiesi, an analyst who was caught on tape by the F.B.I. passing on illegal tips to Mr. Rajaratnam.

"Being in her presence is memorable," Ms. Williams said, recalling the former beauty queen's pink silk sleeveless dress, matching pink pumps and pearls that she wore on the day of her sentencing. "It was so out of place for court."

Ms. Chiesi is best remembered for comparing the feeling of passing on illegal information to an orgasm. "It's mentally fabulous," she later said.

Ms. Williams also captured the moment when Robert W. Moffat Jr., one of Ms. Chiesi's lovers and a former senior executive at IBM, sobbed as he was sentenced to six months in prison while his disabled wife and children looked on.

"You can't be faint of heart in this job — you've got to get these moments," she said.

On March 12, 2009, in the split second after Mr. Madoff admitted to running a $65 billion Ponzi scheme, the judge remanded him, and courtroom guards swooped in to handcuff him and take him away. Ms. Williams was the first to catch it on her canvas. Later, outside the courthouse, she ran into one of Mr. Madoff's victims, a woman in her late 30s, who kissed her fingers and touched the image, telling Ms. Williams, "That's just what I wanted to see."

Then there are the brief instances when Wall Street titans, caught at their most vulnerable, strike an image incongruous with their usual demeanor. Ms. Williams recalled the day when Michael S. Steinberg, a portfolio manager at the hedge fund SAC Capital Advisors, was brought before a Manhattan judge to be read the insider trading charges against him.

The police escorted him, in handcuffs, into the Lower Manhattan courthouse through the main elevators rather than the usual back way leading into the courtroom. When Mr. Steinberg emerged from the main elevators, there was a look of utter shock on his face.

"Being caught is so out of their wildest dreams," she said.

Martha Stewart, the entrepreneur, remained aloof during her insider trading trial. Every day, she would glide into the courtroom flanked by bodyguards, called Team Martha. She rarely interacted with anyone but her lawyers. But one day, Ms. Stewart brought a duffel bag to court and handed out homemade seat cushions to each of her courtroom supporters.

There is one character who still baffles Ms. Williams — the one who commits a crime for no financial benefit. Rajat Gupta, the former global chairman of McKinsey & Company and a former director of Goldman Sachs, was sentenced to prison for tipping his friend Mr. Rajaratnam off about a $5 billion investment that Warren E. Buffett's Berkshire Hathaway planned to make in Goldman. Mr. Rajaratnam pocketed $900,000 from trading on the tip.

For his crime, Mr. Gupta received two years in prison. "He didn't do it for money," Ms. Williams said. "How do you wrap your head around that?" In her collection of drawings is an image of Mr. Gupta embracing his wife and four daughters after the jury announced its guilty verdict.

Then there are scenes that never make it into the papers or onto a canvas. Etched in Ms. Williams's memory is the testimony of Lloyd C. Blankfein, the former chief executive of Goldman, at Mr. Gupta's trial.

He was funny and engaging, captivating the jury with his charisma, she recalled, but he was also maddeningly difficult to draw because he never stopped moving. During part of his testimony, he played with a rubber band, rolling it around his fingers, until he noticed Ms. Williams drawing him. He smiled and stopped.

Then during a long sidebar, when the lawyers were conferring with the judge, he turned to the microphone. He tapped it a little, then he tapped it some more before finally in one dramatic gesture, he pulled off the foam cover, releasing a sudden "whoam!" The room went silent.

Flipping through the three decades of courtroom drawings by Ms. Williams, one gets the sense that history repeats itself. The actors change, but the characters stay the same.

"These guys get up on the stand and say how hard they worked," Ms. Williams said. But then they throw it all away, she continued, adding, "What does it all come to?"

A version of this article appears in print on 04/15/2014, on page B5 of the NewYork edition with the headline: Capturing on Canvas the Downfall of Wall Street's Criminals.

13.07 | 0 komentar | Read More

ArtsBeat: ‘Game of Thrones’ Recap: What a Wonderful Wedding

Here be spoilers, and analysis that probably qualifies as obsessive, in a clinical sense.

Well that didn't take long.

It was only a couple episodes ago that Bran learned he was able to inhabit the minds of animals. Now he's becoming increasingly hooked on the sensation, a development that has the potential to transform his vague northward mission into an after-school special on warging addiction.

But it seems like something else significant happened on Sunday night, too …

Oh, right. Only the MURDER OF MOST EMINENTLY HATEABLE MAJOR TELEVISION CHARACTER SINCE … Who? Benjamin Linus? J.R. Ewing? What other prime-time rage-crush has been more adept at inspiring such a pure, cleansing contempt than the execrable King Joffrey Baratheon? Jack Gleeson was blessed with an incredibly punchable sneer, but his master stroke, as an actor, was to base Joffrey's despicableness in universally recognizable character faults. He wasn't just some lunatic sadist (see: Snow, Ramsay). Joffrey was a grotesque exaggeration of the insufferable rich kid at your high school — privileged beyond imagining but still petulant and mean, obnoxious and insecure, and indifferent to the value of anything or anyone. We despised those guys, even when they weren't shooting people with crossbows for sport.

Watching 'Game of Thrones'

Weekly recaps of the HBO fantasy epic.

But on a show like "Game of Thrones," with its three-dimensional characters and their complicated motives, it was oddly comforting to have a guy like Joffrey around to loathe without mitigation. He was a gift to that part of your brain that just likes to be angry, and now he's gone — undone by a mouthful of poisoned pigeon pie or wine. It'd be sad if it wasn't also satisfying to watch him convulsing wildly, his karma finally catching up to him. It's to Mr. Gleeson's credit that it wasn't as satisfying as I thought it would be.

There was plenty of warning, of course. Signs last week pointed to things going badly at the royal wedding, and the smart money was on Joffrey to catch the worst of it. There was the foreshadowing we discussed last week — the arrival of Oberyn the Lannister hater, and Joffrey not expecting "any trouble" — as well as this show's tendency to swing for the fences. Joffrey's death offered the biggest narrative shake-up.

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Who killed Joffrey? (No spoilers, book people.)

Then, once the wedding celebration had actually begun, we had Joffrey out-Joffreying himself, pushing our contempt deeper and deeper into the red as he pelted Sigur Ros with coins, cackled at his boorish dwarf minstrel show and extravagantly humiliated the beloved Tyrion. "Game of Thrones" is known for pulling the rug out from under you, but it routinely telegraphs deaths, too, amping up a character's loathsomeness to produce maximum satisfaction when the end arrives (Polliver, Kraznys the slaver, Mero the misogynist sellsword).

By the time Joffrey started coughing, I wondered what had taken so long, but the death scene was a marvel. Mr. Gleeson managed to project some real human terror, and it was genuinely, if somewhat disturbingly, moving to see Cersei, Jaime and Joffrey finally all huddled together as a family. (Name me another show that could break your heart a little over a pair of incestuous twins and their savage spawn.)

Tyrion was blamed, of course — now we know why he gets locked up — but thoughts turned immediately to who really dunnit. I watched and rewatched that scene as if it were the Zapruder film, looking for clues, but I still don't know. So let's break down some of the suspects in order of likelihood:

• Oberyn Martel: The man all but said in the premiere that he was in town to kill Lannisters. At the wedding, he was less strident but still barbed, basically telling Tywin and Cersei that they were Team Rape and Murder. He didn't seem especially murderous himself that day, but again, he all but said that he was in town to kill Lannisters, which makes him the obvious choice. But is he too obvious?

• Melisandre: Remember the three "usurper" effigy leeches she had Stannis burn last season (representing Robb Stark, Joffrey and Balon Greyjoy)? Well after Joffrey's demise, it's two down, one to go.

• The House Tyrell: The big question here is what Joffrey's death means for Margaery (Natalie Dormer). I'm no authority on paths of succession in the Seven Kingdoms, but assuming she and Joffrey didn't find a way to procreate on the way to the reception, she wouldn't even have Queen Regent status. The next Baratheon in line would be Stannis, I assume. (Gendry is still under the radar and rowing towards King's Landing, presumably.) But with Stannis on the outs, perhaps the Tyrells have a plan, possibly one based on the support of the Flea Bottom masses Margaery has been cultivating. Margaery, now a double-Baratheon widow (counting her brief sham marriage to Renly), married Joffrey only for power. I wouldn't put spousicide past her if she could benefit politically. Beyond that, the Tyrell case is mostly circumstantial. Early on, Lady Olenna tells Sansa that killing man at a wedding is "horrid" and wonders "what sort of monster would do such a thing?" Maybe trying to throw people off the scent? She also mentions that she paid for the food, and there was the lingering camera shot on the pie, with its butchered birds, after Joffrey had cut it with his sword. There was also the way Margaery aggressively shoveled said pie into Joffrey's face, but these could all be red herrings.

• Petyr Baelish: "Chaos is a ladder," Littlefinger said in Season 3, and few things are more destabilizing than the murder of a king. The freshly minted Lord of Harrenhal wasn't at the wedding, which is exactly how an operator like Littlefinger would handle an assassination plot. He's either conspired with or betrayed (or both) most of the people on this list, and don't overlook the revenge factor — his feelings for Lady Catelyn Stark seemed to be genuine. Would you rule him out?

• Varys: Another wildcard, based largely on his general status as a court schemer. But did you notice how many times the camera cut to Varys during the ceremony? Each time he looked dour or preoccupied — in striking contrast to the (admittedly idiotic) glee around him at Joffrey's high jinks — to the point that he was like a living meme. ("Varys is not amused.") Perhaps he was just offended by the dwarf show. Or perhaps he was waiting, darkly, anticipating the execution of a plot he hatched, maybe in league with …

• Dontos Hollard: He certainly has the motive, having been repeatedly disgraced by Joffrey. Did you see how quickly he appeared at Sansa's side, helping her to flee?

• Sansa: She has more reason to kill Joffrey than anyone. I just don't see it, but I've been wrong before.

Of course it's possible that some combination of the above or some other enemy entirely had a hand in Joffrey's demise — he wasn't exactly a charmer. Please share your own theories in the comments.

The one person who does seem innocent is the guy who took the fall. But Tyrion's lot this season seems to be as a sort of sacrificial lamb for the sins of his father and the world he has fostered at King's Landing. A moral man sticks out in a place devoid of ethics, making him all the easier to cut down.

Speaking of daddy issues, the other major plot development this week involved the dreaded Ramsay (Iwan Rheon), who in characteristic fashion, kicked things off by hunting an actual human girl with his sidekick Myranda and the creature formerly known as Theon Greyjoy in tow. They shot the girl full of arrows, but Ramsay stopped Myranda from finishing her off so the dogs could have the honor. Because, of course he did.

It's pretty rich that Ramsay should be teaching anyone about the virtues of restraint since his creators have shown so little in writing his storyline. His season-long degradation and torture of Theon was maybe the biggest misstep the series has made, to the point that I, like his victim, have a physical reaction anytime Ramsay appears. (Theon/Reek cowers. Mine's more of a weary sigh.)

Nevertheless, Ramsay appears to have more to do this season. Roose Bolton, his father, has pledged to reconsider Ramsay's steerage-class status within the family if he takes Moat Cailin, claimed during the war by the Ironborn (ruled by Balon Greyjoy, Theon's father and Melisandre's third "usurper," remember). Ramsay will no doubt stir things up, but at this point, his twisted, one-dimensional malevolence is so firmly entrenched and unrelatable that I have a hard time caring one way or the other. Mostly I'm just looking forward to the day when someone serves Ramsay his own pigeon pie, and we can all move on.

A FEW THOUGHTS WHILE WE ENJOY OUR BOOK SOUP AND GRILLED SEAGULL

• Congratulations to Stannis, Selyse and Melisandre, who set a record this week for world's worst dinner party. Funereal ambiance, spoiled meat and awkward chit-chat between a surly lord, his insane wife and his dark priestess adviser-shadow-monster-babymama? That one's not getting topped for a while. I was surprised by Melisandre's tenderness with the princess Shireen, who again demonstrated that the kids seem to be the only ones who get how truly messed up things are in this world. Yes, your poor uncle screamed when we burned him alive, Melisandre explains, but women also scream during childbirth, and then their agony gives way to ecstasy. "Afterwards they aren't ash and bone," Shireen replies.

• Shae Watch, Week 2: Do we think she actually made it on the boat?

• No surprise, but the second Valyrian steel sword was a wedding gift for Joffrey. "Such a great sword should have a name!" he exclaimed, in a fun callback to the Hound's dirty joke from last week.

• Loved seeing Bronn as the Apollo Creed to Jaime's Rocky in the training scene. ("Rocky 3″ Apollo, to be clear.) The writers keep finding new ways to use Bronn, played with mercenary savoir faire by Jerome Flynn, and I always enjoy it.

• Brienne lo-oves Jaime! Brienne lo-oves Jaime!

• Finally, Mr. Gleeson, who seems like a thoughtful lad, says he's done with acting after "Game of Thrones," and who can blame him? As Joffrey, he achieved a sort of villainous perfection that would be hard to top, or to live down. He wasn't going to winningly bumble his way through a rom-com anytime soon. But it's worth noting again how truly great he has been as the mad boy-king. Long live King Joff — well, that doesn't really work. But really, he was tremendous.

13.08 | 0 komentar | Read More

DealBook: Judge Approves SAC Plea, Closing a Painful Chapter

Updated, 9:40 p.m. |
In the span of a week, Steven A. Cohen's investment firm changed its name, hired a former federal prosecutor and became a felon.

Breaking months of suspense, a federal judge on Thursday approved the firm's plea deal that resolved criminal insider trading charges and required a $1.2 billion penalty, closing a searing chapter in the 22-year history of Mr. Cohen's once-mighty hedge fund.

Now the 57-year-old investor is hoping for a less litigious transition for his firm, as it becomes a so-called family office, rechristened Point72 Asset Management, that will manage about $9 billion of his own fortune.

Federal authorities, speaking on the condition of anonymity, privately acknowledge that additional charges against SAC employees are unlikely unless new evidence surfaces. And the authorities, who still have a smattering of insider trading cases to file against other hedge funds, have seen a slight downtick in reports of suspicious trading.

But to shake fully its tainted past — and steer clear of the spotlight — Mr. Cohen's firm will have to do more than plead guilty and change its name. And for Mr. Cohen, who has not been criminally charged despite spending the better part of a decade under investigation, a few legal hurdles remain before he can exhale.

Mr. Cohen still faces a civil action from the Securities and Exchange Commission, which during the course of the case could identify additional wrongdoing and permanently bar him from managing money for outside investors.  The Federal Bureau of Investigation, authorities say, also continues to examine a handful of stocks for signs of insider trading at SAC, while several former employees who cooperated with the investigation have yet to be sentenced, a sign the case is not officially closed.

Prosecutors will now scrutinize whether Mr. Cohen has adopted compliance measures at his firm that amount to more than a symbolic gesture.

The SAC case provided prosecutors and the F.B.I a capstone to their sprawling insider trading investigation, which swept into some of Wall Street's most vaunted trading floors and board rooms. Under Preet Bharara, the United States attorney in Manhattan, prosecutors have secured some 80 insider trading convictions since 2009, though Mr. Cohen has never been charged.

"They pushed him out of the hedge fund business, even if not out of his mansion," said Erik M. Gordon, a professor at the University of Michigan Business School.

Even if Mr. Cohen is never charged, the indictment of a firm he founded in 1992 with $25 million and expanded to $14 billion last year, has left a lasting reputational stain. The initials on the door were his, and he was the undisputed boss.

Judge Laura Taylor Swain of the Federal District Court in Manhattan, in accepting the firm's guilty plea on Thursday, made clear that this was no garden-variety Wall Street criminal case. Under the terms of the deal, SAC agreed to pay the penalty, the most ever in an insider trading case, and shut its doors to outside investors. "The defendants committed very serious financial crimes," the judge told a packed courtroom, adding that "these crimes were clearly motivated by greed."

She also took a swipe at the top rungs of SAC, saying that its management "ignored blatant red flags" and "rewarded this illegal behavior."

Judge Swain, known for her meticulous attention to detail, had declined to approve the plea deal in November, when SAC pleaded guilty. This week, she expressed lingering questions about the fine and the "qualifications" of the outside compliance consultant picked to keep an eye on Mr. Cohen's firm.

At the hearing, the judge asked prosecutors about a potential conflict that had arisen with the outside compliance consultant, Bart M. Schwartz, and his consulting firm, where one executive has a son who works as a trader for Mr. Cohen. Antonia Apps, an assistant United States attorney, said authorities had vetted the situation and were convinced it created no conflict for Mr. Schwartz, a former federal prosecutor with a long history of serving as a monitor in government investigations.

If Judge Swain had balked at the deal, SAC could have withdrawn its guilty plea and sent the negotiations back to Square 1.

The judge's approval of the plea deal, and the firm's ability to continue to trade as Point72, could embolden prosecutors to file other criminal cases on Wall Street.

When weighing charges against a company, prosecutors often fear job losses and threats to the broader economy — Arthur Andersen, Enron's accounting firm, shut down after its indictment. But the rare show of criminal force against SAC demonstrated that such charges were not an automatic death sentence, given the firm's transition to Point72.

On Thursday, Mr. Bharara said in a statement, "Today's sentence affirms that when institutions flout the law in such a colossal way, they will pay a heavy price."

While Mr. Bharara did not attend the hearing on Thursday, some of the architects of the SAC case were in the courtroom. They included David Chaves, a senior F.B.I. official; Lorin Reisner, the head of Mr. Bharara's criminal division; and Anjan Sahni, another senior prosecutor. For SAC, four lawyers from the firms Willkie Farr & Gallagher and Paul, Weiss, Rifkind, Wharton & Garrison gathered at the defense table.

The investigation into SAC traced to long-held suspicions about Mr. Cohen's investment returns. As the fund posted average annual returns of more than 25 percent, competitors and regulators alike questioned whether the results were just too good to be true.

When indicting SAC last July, prosecutors attacked its pursuit of "an edge" in trading. Some of the firm's traders cozied up to corporate insiders, prosecutors said, while others collected tips from secret drug trials run by the pharmaceutical company Elan.

Elan had filed a motion seeking to be declared a "victim" and recoup the $1.5 million in legal fees it spent to comply with government document requests during the investigation, but a lawyer for the company said at the hearing on Thursday that SAC had agreed to reimburse the company in full.

The trading tactics of individual employees underpinned the indictment of the firm. Referring to the eight former SAC employees criminally charged with insider trading, prosecutors called the firm a "veritable magnet of market cheaters." Under corporate liability law, the government can attribute the acts of employees to a firm as long as the employees acted "on behalf of and for the benefit of" the company.

Of the eight SAC employees charged, six cooperated with the government's case. The remaining two, Mathew Martoma and Michael Steinberg, were convicted in recent trials.

"To have eight criminal convictions in a single institution is remarkable," said Ms. Apps, the prosecutor, noting that SAC had fewer than 1,000 employees.

The plea deal and the penalty — a $900 million fine and roughly $300 million in forfeited profits — is one element of Mr. Cohen's broader strategy to put the case behind him and build good will with the government.

This week, he also hired another former federal prosecutor, Vincent Tortorella, to fill the newly created role of chief surveillance officer and signed a deal with a software company backed by the Central Intelligence Agency to monitor trading.

At the hearing on Thursday, the firm's general counsel, Peter Nussbaum, said the firm "accepted responsibility" for the misdeeds of its employees.

Later on, a top lieutenant to Mr. Cohen circulated a memo to Point72 employees saying, "We will do whatever we can to make sure this doesn't happen again."

Judge Swain, ending the proceeding with a forward-looking thought, noted that Mr. Cohen's new family office would continue to trade billions of dollars, employ hundreds of people and remain a prolific force in the stock market.

Looking up, Judge Swain expressed hope that Point72 will operate with "respect and compliance with the law."

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DealBook: Banks Ordered to Add Capital to Limit Risks

Updated, 9:08 p.m. | Federal regulators on Tuesday approved a simple rule that could do more to rein in Wall Street than most other parts of a sweeping overhaul that has descended on the biggest banks since the financial crisis.

The rule increases to 5 percent, from roughly 3 percent, a threshold called the leverage ratio, which measures the amount of capital that a bank holds against its assets. The requirement — more stringent than that for Wall Street's rivals in Europe and Asia — could force the eight biggest banks in the United States to find as much as an additional $68 billion to put their operations on firmer financial footing, according to regulators' estimates.

Faced with that potentially onerous bill, Wall Street titans are expected to pare back some of their riskiest activities, including trading in credit-default swaps, the financial instruments that destabilized the system during the financial crisis.

In that respect, some regulators and advocates for tougher financial regulation said, the new rule is a more straightforward tool that will be harder to evade and easier to enforce than many of the new regulations covering the sprawling, complex businesses of banking. Capital is important to banks because it acts as a buffer for potential losses that might otherwise sink an institution.

"It's real, it's tangible, it makes a difference, and improves the banks' loss absorbing capacity," said Sheila C. Bair of the Pew Charitable Trusts and a former chairwoman of the Federal Deposit Insurance Corporation, a bank regulator. "Many of the other rules are about controlling behavior, but there is only so much behavior you can control."

The banks and the shareholders have had time to brace for the rule, which was originally proposed in July. It is also scheduled to take effect at the start of 2018, giving the banks considerable time to adapt and raise capital.

The F.D.I.C., the Office of the Comptroller of the Currency and the Federal Reserve wrote the rule. But tensions among the agencies increased when William C. Dudley, the president of the Federal Reserve Bank of New York, raised the concern that the new rule could complicate the Fed's efforts to conduct monetary policy. In the final rule, however, regulators said that they expected the impact on monetary policy to be limited.

"Banks with stronger capital positions are in a better position to lend, to compete favorably in any market and to achieve satisfactory results for investors," Thomas M. Hoenig, vice chairman of the F.D.I.C., and a firm proponent of the rule, said in a statement. "Without sufficient capital, the opposite is true."

As regulators approved the rule, they also proposed a crucial adjustment that would most likely make the rule tougher for firms with large Wall Street businesses. The regulators said that they expected that adjustment to be part of the rule by 2018, but banks are certain to lobby against it, as they did with the main rule. The financial industry contended that it was blunt and, in many ways, unnecessary.

"The benefit of the leverage ratio is that it's a simple tool, but the problem with the leverage ratio is that it's a simple tool," said Oliver I. Ireland, a partner at the law firm Morrison & Foerster.

Under other regulatory calculations, banks get to set capital levels based on the perceived risk of their assets. The process of assessing risk, however, can be complex, subjective — and vulnerable to abuse by banks that want to try to increase profits by holding less capital.

In contrast, the new rule demands that the same amount of capital be held against all assets, regardless of their perceived risk. Still, opponents of the rule assert that holding large amounts of capital against safer assets, like United States Treasury securities, makes no sense.

"The wisdom of that is not completely clear," Mr. Ireland said.

Under the rule, banks with over $700 billion in assets will have to raise their capital, measured by the leverage ratio, to 5 percent of their overall assets. The ratio will have to be 6 percent at the banks' federally insured banking subsidiaries, where many of their riskiest activities are.

When the rule was proposed last year, many of the eight biggest banks appeared to already have sufficient capital to comply. But that may change if the proposed adjustment takes effect. The adjustment increases the assets that get counted in the leverage ratio calculation, most likely forcing banks to hold more capital than they expected. On Tuesday, the regulators estimated that the eight affected banks might have to find a combined $68 billion in capital to meet an adjusted rule.

The regulators did not identify which banks fall short. But, on paper, JPMorgan Chase appears to have a significant deficit at its large insured bank subsidiary. Calculations by The New York Times put the shortfall at around $30 billion.

In a conference call with investors this year, Marianne Lake, JPMorgan's chief financial officer, said the bank could take financial actions to meet the new leverage ratio that would not significantly crimp its earnings

The regulators appear to have built the adjustment to the rule to reduce the risk of credit-default swaps, which played a central role in the so-called London whale trading scandal at JPMorgan. Under the adjustment, banks would have to hold extra capital against such swaps, unless their risk is properly offset with other trades.

The adjustment could also reduce the use of short-term borrowing called "repo" that Wall Street makes great use of. Repo loans came apart quickly in the crisis and contributed to the instability. Daniel Tarullo, the Fed governor who oversees regulation, has said that he wants extra regulations to deal with short-term funding.

In the adjustment, the regulators are also proposing a change that might have been motivated by a desire to stop another close-to-the-edge practice that has occurred at large banks. Certain firms have increased their assets to increase trading profits but then reduced them at the end of the month or quarter to minimize capital requirements. The adjustment could make that much harder by taking a daily average for assets for the entire quarter or month.

Some supporters of a tougher overhaul applauded the new rule, but they also questioned whether it was enough to do away with what they call the too-big-to-fail problem. They said that despite the overhaul, they believed that some banks were still so large that if they failed, taxpayers would still have to bail them out to prevent their collapse from weighing on the overall economy.

Senator Sherrod Brown, Democrat of Ohio, who has introduced a bill with Senator David Vitter, Republican of Louisiana, that envisions higher leverage ratios than those approved on Tuesday, said, "Today's rule is a major step forward, but we can and must do more."

A version of this article appears in print on 04/09/2014, on page A1 of the NewYork edition with the headline: Banks Ordered To Add Capital To Limit Risks.

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Bits Blog: Experts Find a Door Ajar in an Internet Security Method Thought Safe

Updated, 10:24 p.m. | A flaw has been discovered in one of the Internet's key security methods, potentially forcing a wide swath of websites to make changes to protect the security of consumers.

The problem was first discovered by a team of Finnish security experts and researchers at Google last week and disclosed on Monday. By Tuesday afternoon, a number of large websites, including Yahoo, Facebook, Google and Amazon Web Services, said they were fixing the problem or had already fixed it.

Researchers were still looking at the impact on consumers but warned it could be significant. Users' most sensitive information — passwords, stored files, bank details, even Social Security numbers — could be vulnerable because of the flaw.

The most immediate advice from security experts to consumers was to wait or at least be cautious before changing passwords. Changing a password on a site that hasn't been fixed could simply hand the new password over to hackers. Experts recommended that, before making any changes, users check a site for an announcement that it has dealt with the issue. "This is a good reminder that there are many risks online and it's important to keep a watchful eye around what you're doing, just as you would in the physical world," said Zulfikar Ramzan, the chief technology officer of Elastica, a security company.

The extent of the vulnerability was unclear. Up to two-thirds of websites rely on the affected technology, called OpenSSL. But some organizations appeared to have had advance notice of the issue and had already fixed the problem by Tuesday afternoon. Many others were still working on restoring security.

Because attackers can use the bug to steal information unnoticed, it is unclear how widely the bug has been exploited — although it has existed for about two years. On Github, a website where developers gather to share code, some were posting ways to use the bug to dump information from servers. The Finnish security researchers, working for Codenomicon, a security company in Saratoga, Calif., and security researchers at Google found the bug in a portion of the OpenSSL protocol — which encrypts sessions between consumer devices and websites — called the "heartbeat" because it pings messages back and forth. The researchers called the bug "Heartbleed."

"It's a serious bug in that it doesn't leave any trace," said David Chartier, chief executive at Codenomicon. "Bad guys can access the memory on a machine and take encryption keys, usernames, passwords, valuable intellectual property, and there's no trace they've been there."

Related

A primer on how to create passwords that drive hackers away.

Organizations were advised to download immediately the newest version of the OpenSSL protocol, which includes a fix, and quickly swap out their encryption keys. It also meant organizations needed to change their corporate passwords, log out users and advise them to change their own passwords.

Then companies began taking inventory of what they may have lost. But because the flaw would allow attackers to surreptitiously steal the keys that protect communication, user passwords and anything stored in the memory of a vulnerable web server, it was virtually impossible to assess whether damage had been done.

Security researchers say they found evidence that suggests attackers were aware of the bug. Researchers monitoring various "honey pots" — stashes of fake data on the web aimed at luring hackers so researchers can learn more about their tools and techniques — found evidence that attackers had used the Heartbleed bug to access the fake data.

Actual victims may be out of luck. "Unless an attacker blackmails you, or publishes your information online, or steals a trade secret and uses it, you won't know if you've been compromised," Mr. Chartier said. "That's what makes it so vicious."

Mr. Chartier advised users to consider their passwords compromised and urged companies to deal with the issue quickly. "Companies need to get new encryption keys and users need to get new passwords," he said.

Security researchers say it is most important for people to change passwords to sensitive accounts like their online banking, email, file storage and e-commerce accounts, after first making sure that the website involved has addressed the security gap.

By Tuesday afternoon, many organizations were heeding the warning. Companies across the web, including Yahoo, Amazon and PayPal, began notifying users of the bug and what was being done to mitigate it. Tumblr, the social network owned by Yahoo, said it had issued fixes and warned users to immediately swap out their passwords.

"This still means that the little lock icon (HTTPS) we all trusted to keep our passwords, personal emails and credit cards safe was actually making all that private information accessible to anyone who knew about the exploit," the security team at Tumblr, which is part of Yahoo, wrote on its site. "This might be a good day to call in sick and take some time to change your passwords everywhere — especially your high-security services like email, file storage and banking, which may have been compromised by this bug."

Steve Lohr and Vindu Goel contributed reporting.

A version of this article appears in print on 04/09/2014, on page A1 of the NewYork edition with the headline: Thought Safe, Websites Find the Door Ajar.

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Sports: Live Analysis: N.C.A.A. Title Game — UConn vs. Kentucky

ARLINGTON, Tex. — The Connecticut Huskies had seen this script before, but they decided on a different ending.

The Huskies captured their second national championship in four years Monday night, staving off a comeback bid by Kentucky and beating the young Wildcats, 60-54.

UConn led by as many as 15 points in the first half, but the Wildcats, who had rallied from early deficits in their last three games, drew within a point in the second half and had momentum on their side.

But the Huskies shot 10 for 10 from the free-throw line and never gave up the lead. Kentucky, with its five freshmen starters, shot just 54 percent from the line, missing 11 of 24 free throws.

UConn's backcourt tandem — Shabazz Napier Ryan Boatright — combined for 36 points, including four 3-pointers by Napier.

11:20 P.M. UConn Wins the National Championship

UConn wins 60-54. It's second national title in four years.

— Steve Eder

11:14 P.M. Free Throw Misses Are Hurting Wildcats

Kentucky is shooting just 54% from the the free throw line on 13 of 24 shooting. That's a lot of points left on the board in a tight game.

— Steve Eder

11:06 P.M. Breathing Room For Huskies

Two huge threes for UConn on back-to-back positions give the Huskies some much-needed breathing room.

— Steve Eder

11:02 P.M. Kentucky Hasn't Taken the Lead

Kentucky has never led in this game, although it has been hanging so close for much of this second half. Think they can finally break through?

— Steve Eder

10:57 P.M. Kentucky Playing Defense

Kentucky's zone has really done a good job nullifying UConn's slashing ability and slowed down Napier and Boatright, who looked all but unstoppable in the first half. One thing to note, however: Kentucky has left 8 points on the board with missed free-throws. That could really come back to haunt them.

— Zach Schonbrun

10:47 P.M. UConn's Guards Have Cooled Off

Shabazz Napier and Ryan Boatright have cooled off in the second half, combining for just 4 points for Connecticut. The pair scored 23 in the first 20 minutes. Still, Connecticut has expanded its lead to 5.

— Steve Eder

10:40 P.M. Kentucky Fans are Getting Loud

In case you can't tell at home, the very large crowd at AT&T Stadium is decidedly backing Kentucky.

— Steve Eder

10:38 P.M. Kentucky Comes Out Firing

We have got ourselves a game. Kentucky comes out of the locker room with a lot more energy and confidence and they've cut the UConn lead to 1. The Harrison twins have combined for 15 points.

— Zach Schonbrun

10:25 P.M. Will the Comeback Cats Strike Again?

Kentucky has made a habit of falling behind in this tournament, particularly in the first half. They fell way behind Louisville in the Sweet 16 – 13 points – only to come back and win. They also gave heads starts to Wichita State, Michigan and Wisconsin, before of course coming back and winning all of those games close. The championship game feels familiar, with Kentucky falling back 15 early, only to make a big run before halftime, making it a 4 point game. Which Kentucky will we see in the second half?

— Steve Eder

10:16 P.M. Halftime Adjustments?

What adjustments would you make if you were John Calipari? Or, asked a different way, how does Connecticut make sure it maintains its lead? Anybody have any suggestions or are you all too mesmerized by Willie Cauley-Stein's shirt? (we don't blame you)

— Zach Schonbrun

10:05 P.M. And It's Close at the Half

After all that – Kentucky trails Connecticut by just 4 points at the half. Connecticut led by as much as 15, but Kentucky came back furiously over the final minutes of the half. Kentucky has come back before in this tournament. It'll set up as an exciting second half.

— Steve Eder

10:01 P.M. Kentucky Is Showing Signs of Life

Kentucky was trailing by 30-15 and things were looking bleak. But the Wildcats have now gone on an 11-3 run. Calipari switched to a zone defense and that has been effective slowing down the Huskies a bit. Three-pointers by James Young and Andrew Harrison also helped.

— Zach Schonbrun

9:49 P.M. Wildcats Need Some Defense

A couple of jumpers by Andrew Harrison provide Kentucky with their first points from outside. But the Wildcats' issue now is defensively. UConn's sets are absolutely cutting the young Cats up right now.

— Zach Schonbrun

9:45 P.M. UConn Guards Staying Hot

Connecticut's backcourt of Shabazz Napier and Ryan Boatright has been well-celebrated over the past couple weeks with the duo coming up big in UConn's string of upsets. The pair is off to another good start – combining to score 16 of UConn's first 24 points.

Each has 8 points – Napier has added two steals and Boatright has three rebounds.

— Steve Eder

9:41 P.M. Who Are Those Guys With Tony Romo?

Former Presidents George W. Bush and Bill Clinton in suite, and #Romo scored the photobomb #CBSDFWFinalFour http://t.co/5KbqGOwxEM

— CBSDFW (@CBSDFW) 8 Apr 14

9:39 P.M. Randle Appears to Be Cramping

CBS says Julius Randle is cramping. He's been coming in and out of the game. That is not good news for Kentucky.

— Zach Schonbrun

9:34 P.M. UConn Sprints Ahead

Well, Ryan Boatright came to play. Actually all of UConn looks sharp. Huskies shooting 7 of 13 and are currently on a 11-2 run. Kentucky is having a hard time against this defense. But then again, Kentucky has been a slow-starting team all postseason

— Zach Schonbrun

9:25 P.M. Working Out Some Early Nerves

Looks to be some early jitters from both teams. Julius Randle left the court after just 2 minutes 50 seconds, probably so Calipari could get him settled a bit. Kentucky has been sloppy with the ball, and the Cats' point guard Andrew Harrison is definitely going to have to tighten up a bit against UConn's pestering guards.

— Zach Schonbrun

9:18 P.M. The Championship Game Is On

And we've tipped off here in Arlington. UConn takes the first shot – and misses. But scores on its second attempt.

— Steve Eder

9:11 P.M. Calipari to the Lakers?

We haven't even tipped, but already some Kentucky news has set the Twitter world abuzz.

About two and a half hours ago, Rex Chapman, the former Wildcats star turned television analyst, wrote on Twitter that a move by John Calipari to the Los Angeles Lakers after the season, win or lose, is a "done deal."

Naturally, this has quickly become just about the one-and-only topic Kentucky fans are talking about before the game. Certainly Calipari-to-the-N.B.A. rumors are nothing new. But the timing of this latest one could not be worse for the Wildcats.

Here's the tweet: https://twitter.com/rexchapman/status/453315509589528576

— Zach Schonbrun

8:56 P.M. There's a Lot of People Wearing Blue

Connecticut and Kentucky fans are filing into AT&T Stadium, and it is difficult to get a clear read on which side is better represented because just about everyone here is wearing blue.

The skies cleared in Arlington, tonight in time for the final night of the Final Four. Fans were even tailgating in the parking lot. Some were tossing around baseballs.

It's a nice night for a basketball game.

— Steve Eder

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