Colin Firth, Emily Blunt film “Arthur Newman” goes to Cinedigm
















LOS ANGELES (TheWrap.com) – Cinedigm has acquired domestic distribution rights to “Arthur Newman,” starring Colin Firth and Emily Blunt, the studio announced on Friday.


“Arthur Newman,” the directorial debut of Dante Ariola, chronicles Wallace Avery (Firth), a depressed man loathed by his ex-wife. He stages his own death and heads out on the road where he meets Mike (Blunt), who also wants a fresh start.













Cinedigm will release the film in theaters mid-2013, with on-demand, premium digital, DVD and TV distribution to follow.


“‘Arthur Newman’ is perfect for today’s audiences… A deeply entertaining film highlighted by touching performances from Colin and Emily that bring real heart and soul to a powerful story of displacement, longing and ultimately, redemption. Moviegoers will leave the theatre moved and uplifted,” Vincent Scordino, vice president of acquisitions for Cinedigm Entertainment Group, said in a statement.


Becky Johnson penned the script for the film, which she also produced alongside Vertebra Films’s Mac Cappuccino, Cross Creek Pictures’ Brian Oliver and Alisa Tager.


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Sick, frail struggle most in storm's aftermath

NEW YORK (AP) — Some of society's most vulnerable people — the elderly, the disabled and the chronically ill — have been pushed to the brink in the powerless, flood-ravaged neighborhoods struggling to recover from Superstorm Sandy.

The storm didn't just knock out electricity and destroy property when it came ashore in places like the Far Rockaway section of Queens. It disrupted the fragile support networks that allowed the neighborhood's frailest residents to get by.

Here, the catastrophe has closed pharmacies, kept home care aids from getting to elderly clients and made getting around in a wheelchair impossible. The city has recorded at least two deaths of older men in darkened buildings.

For some living in the disaster zone, it has all been too much.

When a team of medics and National Guardsmen turned up at Sheila Goldberg's apartment tower in Far Rockaway on Friday to check on the well-being of residents, floor by floor, the 75-year-old burst into tears and begged for help caring for her 85-year-old husband.

"This is a blessing. I'm at my wit's end," she said, sobbing.

Her husband, Irwin, has a pacemaker, wears a colostomy bag and needs her help to do almost everything. When the power was on, Goldberg said, "I could take care of him by myself and survive." But for days, the building had no heat or electricity. There were no open stores to buy food. Until the end of the week, there was no water or elevators either, meaning residents like the Goldbergs, on the 25th floor, had to cart water up the steps themselves just to flush the toilet. A bad stench permeates much of the building.

"I'm running out of my blood pressure medication. We're both going to drop dead in this apartment," Sheila said. The medical team said it would make arrangements to transfer Irwin to a medical facility, at least temporarily.

City and federal officials, and a growing army of volunteers, are trying hard to make sure families like that don't fall into despair. Their efforts come alongside relief workers, donations, volunteers and demolition crews who flocked to New York and New Jersey in recent days to assist in the massive cleanup. The region took a few more steps to move past the storm Saturday, when power was restored for many more and gas rationing eased some of the clogged lines at stations in New York.

Paramedics from all over the country, including the ones that found the Goldbergs, fanned out across the Rockaways this weekend to check on shut-ins and anyone else who might need help.

The idea was to find people who "sheltered in place" during the storm, who might need assistance, said Nancy Clark, an assistant commissioner in the city's health department.

The going was slow. In their first three hours, the teams had gone through five high-rise towers. Several people were taken to the hospital. Others were hooked up with water, food, blankets or needed prescription medications.

Two floors below the Goldbergs, medics from South Carolina found Daisy Nixon, 70, slumped in a chair under a pile of blankets. A diabetic and a victim of two strokes, she was suffering from an untreated dislocated shoulder injured before the storm. Nate Thompson, an EMT, checked her blood glucose levels and found them troublingly high.

"It's been cold. Lord, have mercy," Nixon said. She said she was also having trouble breathing at night. When Thompson said he would get her an ambulance, Nixon was overjoyed.

"Can I kiss you? Don't you walk away from me," she said, and planted a smooch on his cheek.

Another neighborhood resident, Joseph Williams, said that the home care aide who normally helps look after his 27-year-old son, who has cerebral palsy and needs a wheelchair, hasn't been able to visit since the storm. After days of trying to take care of him himself, in a flooded high-rise with no utilities, Williams gave up and carried him down seven flights, so he could be evacuated to Brooklyn.

Yet, there were rays of hope amid the gloom. In Newark, N.J., an Amtrak train arrived pulling a box car filled with donations from New Orleans.

Fuel lines in the region remained long, but were only a shade of the nightmare they had been in recent days. Some gas stations on Staten Island had 20 cars in line Saturday afternoon.

In Staten Island's waterlogged New Dorp section, volunteers walked in knots, often carrying shovels and pails with the price tags still on them. A Boy Scout troop served hot dogs and grilled cheese. People pushed grocery carts filled with food and bottled water. On one sidewalk, a generator was hooked up to a popcorn maker, spilling a fresh batch into a bowl.

Mandie Collins and Mary Lou Sabatini, from the West Brighton neighborhood of Staten Island, cooked a turkey and ham, and walked door to door with coolers offering sandwiches.

"It's surreal," Collins said. "I lived down the block before. I passed by my old apartment and it's gone."

Utility companies have made progress restoring power. Most service was expected to be restored in New Jersey over the weekend, and the utility that serves New York City and suburban Westchester County said it has restored electricity to about 99 percent of the 1 million homes and businesses that lost power in the storm and a subsequent nor'easter, though that percentage doesn't count tens of thousands of homes the utility says are too damaged to receive power.

Power problems remained unresolved on New York's Long Island, where about 300 people staged an angry protest at an office of the beleaguered Long Island Power Authority. About 130,000 of its customers still didn't have power Saturday, LIPA said.

Amid the drudgery and heartbreak of cleanup came one special moment for Joanne McClenin, who had 5 feet of water in her Staten Island home.

On Wednesday, her husband returned to their house to find someone had returned Joanne's 1930 baptism certificate from St. Anthony's Church in Manhattan. It had a smudge of mud on it.

The certificate had been stored in a file cabinet of her late parents' belongings, stored in a shed in their yard. The water from Sandy swept it away.

"It felt like my father was watching me," she said.

___

Associated Press writers David Bauder, Verena Dobnik and Mae Anderson contributed to this report.

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U.S. investigator in Afghan rampage case suggests gunman not alone
















TACOMA, Washington (Reuters) – The wife of an Afghan villager killed in a rampage blamed on a decorated U.S. officer told an Army investigator that more than one soldier was present when her husband was shot dead at their home in March, the investigator testified on Saturday.


Military prosecutors are seeking the death penalty for Army Staff Sergeant Robert Bales, accusing him of killing 16 villagers, mostly women and children, when he ventured out of his remote camp on two revenge-fueled forays over a five-hour period in March.













The wife’s account, relayed by Army criminal investigator Leona Mansapit, appeared to cast doubt on the government’s case that Bales alone was responsible for the deaths, although survivors have so far testified to seeing only a single soldier.


The U.S. government, which has been laying out its case against Bales in a pre-trial hearing aimed at deciding whether he can be sent for court martial, says a coherent and lucid Bales acted alone and with “chilling premeditation”.


Mansapit said that the wife of Mohamed Dawood, who was killed in the village of Najiban, recalled a gunman entering the couple’s room shouting about the Taliban, while another man, a U.S. soldier, stood at the door.


The shootings in Afghanistan’s Kandahar province marked the worst case of civilian slaughter blamed on an individual U.S. soldier since the Vietnam War and damaged already strained U.S.-Afghan relations.


Mansapit said the wife, who spoke to her through an interpreter, said one of the men pulled her husband out of the door, while the other stopped her from following. One of the men then put a gun to her husband’s head and killed him, while the other continued to yell about the Taliban, grabbing her by the hair and slamming her head against the wall, she said.


Mansapit, who was called by the defense, recalled the woman as saying that outside there were more soldiers “speaking English among themselves”. She put the woman’s age at about 25 but did not name her. It was not immediately clear whether the wife would testify to the hearing herself.


The testimony came a day after a father and two sons described being attacked by a sole U.S. soldier in their family compound in the Afghan village of Alkozai. So far, the only sworn references to more than one soldier have been second hand.


AFGHAN TESTIMONY


A veteran of four combat tours in Iraq and Afghanistan, Bales faces 16 counts of premeditated murder and six counts of attempted murder, as well as charges of assault and wrongfully possessing and using steroids and alcohol while deployed.


Prosecutors have already presented physical evidence to tie Bales to the crime scene, with a forensic investigator saying a sample of blood on his clothing matched a swab taken in one of the compounds where the shooting occurred.


Bales’ lawyers have not set out an alternative theory to the prosecution’s case, but have pointed out inconsistencies in testimony and highlighted incidents before the shooting where Bales lost his temper easily, possibly setting up an argument that he was suffering from post-traumatic stress disorder.


Gathering evidence and witness statements was complicated by the speedy burial of victims, the inability of U.S. investigators to access the crime scenes for three weeks after the violence, and the dispersal of possible witnesses after treatment at a Kandahar hospital.


Bales’ lead civil defense attorney John Henry Browne, who is in Kandahar to question witnesses, complained early in the investigation that his team was denied access to villagers wounded in the attacks.


One of the villagers, a 15-year-old boy who was wounded in the rampage in Alkozai but survived by hiding, testified to the hearing at a U.S. Army base in Washington state that the shooter wore a U.S. military uniform.


“He put his pistol in my sister’s mouth and then my grandmother started wrestling with him,” the boy, introduced to the court by the single name of Rafiullah, said via video link from Kandahar Air Field. “He shot me in my legs.”


The boy’s testimony was consistent with the recollections of another teenage boy, Sadiquallah, who testified previously that he saw only a single American that night.


(Reporting By Bill Rigby; Editing by Cynthia Johnston and Pravin Char)


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Twin explosions strike southern Syrian city
















BEIRUT (AP) — Syria‘s state-run news agency says two large explosions have struck the southern city of Daraa, causing multiple casualties and heavy material damage.


SANA did not immediately give further information or say what the target of Saturday’s explosions was.













The Britain-based Syrian Observatory for Human Rights says the blasts went off near a branch of the country’s Military Intelligence in Daraa.


The Observatory, which relies on a network of activists on the ground, says the explosions were followed by clashes between regime forces and rebels fighting to topple President Bashar Assad.


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China derides U.S. “Cold War mentality” towards telecoms firm Huawei
















BEIJING (Reuters) – The United States is exhibiting a “Cold War mentality” with its fears that Chinese telecommunications equipment manufacturer Huawei poses a security risk because of its ties to the Communist Party, China‘s commerce minister said on Saturday.


The U.S. House of Representatives’ Intelligence Committee warned last month that Beijing could use equipment made by Huawei, the world’s second-largest maker of routers and other telecom gear, as well as rival Chinese manufacturer ZTE, the fifth largest, for spying.













The report cited the presence of a Communist Party cell in the companies’ management structure as part of the reason for concern.


The state role in business prompted a U.S. congressional advisory panel to complain this week that Chinese investment in the United States had created a “potential Trojan horse”.


“Can you imagine if China started asking U.S. companies coming to China what their relationship was with the Democratic or Republican parties? It would be a mess,” Commerce Minister Chen Deming, himself a Communist Party member, told reporters on the sidelines of the 18th Party Congress, which will usher in a new generation of leaders.


“If you see me as a Trojan horse, how should I view you? By this logic, if the Americans turned it around, they would see that it’s not in their interest to think this way.”


All Chinese state-owned enterprises and a growing number of private Chinese firms have a Communist Party secretary at the top of their management structure. In most cases, the top management are themselves party members.


Neither Huawei nor ZTE is state-owned. Huawei is owned by its employees and ZTE by different institutions.


Suspicions of Huawei are partly tied to its founder, Ren Zhengfei, a former People’s Liberation Army officer. Huawei denies any links with the Chinese military and says it is a purely commercial enterprise.


The Commerce Ministry China last month dismissed the U.S. suspicions as groundless.


“This report by the relevant committee of the U.S. Congress, based on subjective suspicions, no solid foundation and on the grounds of national security, has made groundless accusations against China,” spokesman Shen Danyang said.


(Reporting by Lucy Hornby; Editing by Nick Macfie)


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“Carrie Diaries” Gets January Premiere Date
















NEW YORK (TheWrap.com) – The 1980s-set “Sex and the City” prequel “The Carrie Diaries” will debut on the CW on Monday, January 14, the network announced.


“90210,” meanwhile, will move to its new 9 p.m. timeslot. And most CW shows will return from holiday break during that week.













The Carrie Diaries,” one of the CW’s most-anticipated shows, stars AnnaSophia Robb as 16-year-old Carrie Bradshaw, who discovers the flashing lights of Manhattan as she copes with the death of her mother. She quickly discovers a vibrant and thrilling club scene.


Based on the novels by Candace Bushnell, “The Carrie Diaries” is from Warner Bros. Television and CBS Television Studios, in association with Fake Empire, with executive producers Josh Schwartz (“Hart of Dixie,” “Gossip Girl“), Stephanie Savage (“Hart of Dixie,” “Gossip Girl”), Len Goldstein (“Hart of Dixie”) Amy B. Harris (“Gossip Girl”) and Bushnell.


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How 'poor judgment' felled military star Petraeus

WASHINGTON (Reuters) - David Petraeus was a star on the battlefield, commanding the Iraq and Afghanistan wars, but was undone by "poor judgment" in engaging in an extramarital affair that led to his downfall as CIA director.


Just two days after his 60th birthday, Petraeus stepped down from the spy agency where he had held the top office since September 6, 2011.


"After being married for over 37 years, I showed extremely poor judgment by engaging in an extramarital affair. Such behavior is unacceptable, both as a husband and as the leader of an organization such as ours. This afternoon, the President graciously accepted my resignation," Petraeus told the shadow warriors he commanded at CIA.


It was a stunning downfall for a revered military man who was seen as one of the top American leaders of his generation and was once considered a potential contender for the White House.


Petraeus was credited with pulling Iraq from the brink of all-out civil war and for battlefield successes in Afghanistan after overseeing a surge of 30,000 troops ordered by President Barack Obama in late 2009. He became known for counter-insurgency strategies that were seen as gaining ground against the Taliban in Afghanistan.


"I don't think he was professionally overrated. His were genuine accomplishments," said James Carafano, a war historian with the conservative Heritage Foundation think tank.


At the time of his nomination to the CIA post, some Washington insiders had said the White House wanted to find a prominent position for Petraeus to ensure he would not be recruited by Republicans as a challenger to the 2012 Obama-Biden ticket.


When he was nominated to lead the CIA there were some concerns in intelligence circles that the high-profile four-star Army general might not be able to lead from the shadows as appropriate for a spy chief.


But once he took over the head office at the U.S. spy agency, Petraeus kept a decidedly low public profile.


Senate Intelligence Committee Chairman Dianne Feinstein, a Democrat, expressed regret about the resignation of "one of America's best and brightest" and said it was an "enormous loss" for the country.


"At CIA, Director Petraeus gave the agency leadership, stature, prestige and credibility both at home and abroad. On a personal level, I found his command of intelligence issues second to none," she said.


RESIGNATION ACCEPTED


After accepting his resignation about a year-and-a-half after nominating Petraeus to the CIA post, Obama said: "By any measure, he was one of the outstanding General officers of his generation, helping our military adapt to new challenges, and leading our men and women in uniform through a remarkable period of service in Iraq and Afghanistan, where he helped our nation put those wars on a path to a responsible end."


Earlier this week, in a Newsweek article entitled "General David Petraeus's Rules for Living," he listed 12 lessons for leadership. Number 5 was: "We all will make mistakes. The key is to recognize them and admit them, to learn from them, and to take off the rear­ view mirrors - drive on and avoid making them again."


In 2010 Petraeus stepped into the breach as the new commander of U.S. forces in Afghanistan to replace General Stanley McChrystal who was fired by Obama in a scandal over an article in which McChrystal and his aides made mocking comments about the president and some of his top advisers.


In 2009 Petraeus was diagnosed with early-stage prostate cancer and underwent radiation treatment. The media-friendly general joked at that time at a Washington event that reporters were only gathered "to see if the guy is still alive."


Petraeus, born in Cornwall, New York, lives in Virginia with his wife Holly. They have two grown children, a son who was an Army Ranger who served in Afghanistan, and a daughter.


Petraeus's wife, Holly, is an activist and volunteer who champions military families, and she continued that work after her husband retired from the military and moved to the CIA.


She currently is assistant director of the office of servicemember affairs at the Consumer Financial Protection Bureau, where she tries to keep unscrupulous lenders from taking advantage of military personnel. The bureau was championed by Harvard law professor Elizabeth Warren, who was elected to the Senate from Massachusetts this week.


Holly Petraeus is the daughter of four-star General William Knowlton, who was superintendent of the U.S. Military Academy at West Point when Petraeus was a cadet.


She briefed the press at the Pentagon on her efforts recently and was introduced by Defense Secretary Leon Panetta, who called her "a true friend of the Department of Defense and a dedicated member of our military family."


Petraeus has four Defense Distinguished Service Medal awards, three Distinguished Service Medal awards, the Bronze Star Medal for valor, and the State Department Distinguished Service Award.


He has a doctorate in international relations from Princeton University.


(Additional reporting by David Alexander, Matt Spetalnick and Diane Bartz; Editing by Warren Strobel and Jackie Frank)

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Marijuana possession cases in Washington state going up in smoke
















SEATTLE (Reuters) – Prosecutors in Washington state‘s two most populous counties plan to dismiss scores of misdemeanor marijuana possession cases following passage of a landmark voter initiative earlier this week to legalize pot for adult recreational use.


Washington and Colorado became the first U.S. states to remove criminal sanctions for personal possession of an ounce (28.5 grams) or less of marijuana as voters approved ballot measures on Tuesday to legalize recreational use of the drug, setting up a possible showdown with the federal government.













Washington state’s legalization measure passed with more than 55 percent of voters supporting it and fewer than 45 percent opposed, and will take effect next month.


But prosecutors in Washington’s King and Pierce counties – which contain the cities of Seattle and Tacoma – moved swiftly to announce they were dropping 225 pending possession cases currently in the pipeline.


“The people have spoken loudly in Initiative 502, and there seems to be no point in continuing to prosecute cases for conduct that’s going to be legal in a couple of weeks,” King County Prosecuting Attorney Dan Satterberg told Reuters.


Pierce County Prosecutor Mark Lindquist said, “I don’t believe any jury is going to convict on a simple marijuana case after this initiative has passed.”


All the cases slated for dismissal represent the relative few in which marijuana possession alone is charged. Conviction for possession of an ounce or less carries a maximum penalty of 90 days in jail, Lindquist said.


Legalization efforts put both Washington state and Colorado at odds with federal law, which classifies marijuana as an illegal narcotic. The U.S. Justice Department has yet to say what if any actions it will take in response to the votes.


Asked to comment on the charge dismissals, a spokeswoman for the U.S. Attorney’s Office for western Washington said the Justice Department was reviewing the newly passed ballot initiatives and “has no additional comment at this time.”


In addition to legalizing personal possession of marijuana, the new Washington and Colorado laws will permit cannabis to be legally sold and taxed at state-licensed stores in a system modeled on what many states have in place for alcohol sales. Those provisions will take longer to be put into effect.


Washington and Colorado already have laws on the books legalizing marijuana for medical purposes, along with 15 other states and the District of Columbia.


Federal prosecutors in some of those states have launched a crackdown on pot dispensaries and greenhouses deemed to be engaged in large-scale drug trade under the pretense of supplying medical cannabis to patients.


(Writing and additional reporting by Steve Gorman; Editing by Cynthia Johnston and Peter Cooney)


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Assad says will live and die in Syria
















DOHA (Reuters) – President Bashar al-Assad said he would “live and die” in Syria and warned that any Western invasion to topple him would have catastrophic consequences for the Middle East and beyond.


Assad’s defiant remarks coincided with a landmark meeting in Qatar on Thursday of Syria’s fractious opposition to hammer out an agreement on a new umbrella body uniting rebel groups inside and outside Syria, amid growing international pressure to put their house in order and prepare for a post-Assad transition.













The Syrian leader, battling a 19-month old uprising against his rule, appeared to reject an idea floated by British Prime Minister David Cameron on Tuesday that a safe exit and foreign exile for the London-educated Assad could end the civil war.


“I am not a puppet. I was not made by the West to go to the West or to any other country,” he told Russia Today television in an interview to be broadcast on Friday. “I am Syrian; I was made in Syria. I have to live in Syria and die in Syria.”


Russia Today’s web site, which published a transcript of the interview conducted in English, showed footage of Assad speaking to journalists and walking down stairs outside a white villa. It was not clear when he had made his comments.


The United States and its allies want the Syrian leader out, but have held back from arming his opponents or enforcing a no-fly zone, let alone invading. Russia has stood by Assad.


The president said he doubted the West would risk the global cost of intervening in Syria, whose conflict has already added to instability in the Middle East and killed some 38,000 people.


“I think that the price of this invasion, if it happened, is going to be bigger than the whole world can afford … It will have a domino effect that will affect the world from the Atlantic to the Pacific,” the 47-year-old president said.


“I do not think the West is going in this direction, but if they do so, nobody can tell what is next.”


QATAR, TURKEY CHIDE OPPOSITION


Backed by Washington, the Doha talks underline Qatar’s central role in the effort to end Assad‘s rule as the Gulf state, which funded the Libyan revolt to oust Muammar Gaddafi, tries to position itself as a player in a post-Assad Syria.


Qatari Prime Minister Hamad bin Jassim Al Thani urged the Syrian opposition to set its personal disputes aside and unite, according to a source inside the closed-door session.


“Come on, get a move on in order to win recognition from the international community,” the source quoted him as saying.


Turkish Foreign Minister Ahmed Davutoglu delivered a similar message, saying, according to the source: “We want one spokesman not many. We need efficient counterparts, it is time to unite.”


An official text of a speech by Qatari Foreign Minister Khalid Mohamed al-Attiyah showed he told the gathering: “The Syrian people awaits unity from you, not divisions … Your agreement today will prove to the international community that there is a unity … and this will reflect positively in the international community’s stance towards your fair cause.”


Across Syria, more than 90 people were killed in fighting on Thursday, the Syrian Observatory for Human Rights said.


In Turkey’s Hatay border province, two civilians, a woman and a young man, were wounded by stray bullets fired from Syria, according to a Turkish official. Turkish forces increased their presence along the frontier, where officials have said they might seek NATO deployment of ground to air missiles.


Syria poses one of the toughest foreign policy challenges for U.S. President Barack Obama as he starts his second term.


International rivalries have complicated mediation efforts. Russia and China have vetoed three Western-backed U.N. Security Council resolutions that would have put Assad under pressure.


Syria’s conflict, pitting mostly Sunni Muslim rebels against forces dominated by Assad’s Alawite minority, whose origins lie in Shi’ite Islam, has fuelled sectarian tensions across the Middle East. Sunni Arab countries and Turkey favor the rebels, while Shi’ite Iran backs Assad, its main Arab ally.


“VICIOUS CIRCLE”


The main opposition body, the Syrian National Council (SNC), has been heavily criticized by Western and Arab backers of the revolt as ineffective, run by exiles out of touch with events in Syria, and under the sway of the Islamist Muslim Brotherhood.


British Foreign Minister William Hague said London would now talk to rebel groups inside Syria, after U.S. Secretary of State Hillary Clinton last week criticized the SNC and called for a new opposition body to include those “fighting and dying”.


But the plan for a body that could eventually be considered a government-in-waiting capable of winning foreign recognition and therefore more military backing ran into trouble almost as soon as it was proposed by SNC member Riyad Seif.


The meeting has so far been bogged down by arguments over the SNC representation and the number of seats the rival groups – which include Islamists, leftists and secularists – will have in a proposed assembly. Seif said he hoped for agreement on that on Thursday night, although the talks may continue into Friday.


Senior SNC member Burhan Ghalioun said the participants were moving towards consensus: “The atmosphere was positive. We all agree that we don’t want to walk away from this meeting in failure,” he told reporters.


Seif’s proposal is the first concerted attempt to merge opposition forces to help end the devastating conflict.


The initiative would also create a Supreme Military Council, a Judicial Committee and a transitional government-in-waiting of technocrats – along the lines of Libya’s Transitional National Council, which managed to galvanize international support for its successful battle to topple Gaddafi.


Michael Doran of the Brookings Institute in Washington told a forum in Doha it would not work for Syria. “It’s not a ridiculous idea, but it’s not going to succeed,” he said.


A diplomat on the sidelines of the talks said international divisions in the U.N. Security council did not help.


“It’s a vicious circle. They are asking the opposition to unite when they admit they are not themselves united,” he said.


(Writing by Tom Perry and Samia Nakhoul; Editing by Alistair Lyon, Alastair Macdonald and Philippa Fletcher)


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Exclusive: SEC left computers vulnerable to cyber attacks – sources
















WASHINGTON (Reuters) – Staffers at the U.S. Securities and Exchange Commission failed to encrypt some of their computers containing highly sensitive information from stock exchanges, leaving the data vulnerable to cyber attacks, according to people familiar with the matter.


While the computers were unprotected, there was no evidence that hacking or spying on the SEC‘s computers took place, these people said.













The computers and other electronic devices in question belonged to a handful of employees in an office within the SEC’s Trading and Markets Division. That office is responsible for making sure exchanges follow certain guidelines to protect the markets from potential cyber threats and systems problems, one of those people said.


Some of the staffers even brought the unprotected devices to a Black Hat convention, a conference where computer hacking experts gather to discuss the latest trends. It is not clear why the staffers brought the devices to the event.


The security lapses in the Trading and Markets Division are laid out in a yet-to-be-released report that by the SEC’s Interim Inspector General Jon Rymer.


NO DATA BREACHED


The revelation comes as the SEC is encouraging companies to get more serious about cyber attacks. Last year, the agency issued guidance that public companies should follow in determining when to report breaches to investors.


Cyber security has become an even more pressing issue after high-profile companies from Lockheed Martin Corp to Bank of America Corp have fallen victim to hacking in recent years.


Nasdaq OMX Group, which runs the No. 2 U.S. equities exchange, in 2010 suffered a cyber attack on its collaboration software for corporate boards, but its trading systems were not breached.


One of the people familiar with the SEC’s security lapse said the agency was forced to spend at least $ 200,000 and hire a third-party firm to conduct a thorough analysis to make sure none of the data was compromised.


The watchdog’s report has already been circulated to the SEC’s five commissioners, as well as to key lawmakers on Capitol Hill, and is expected to be made public soon.


SEC spokesman John Nester declined to comment on the report’s findings.


SEC NOTIFIED EXCHANGES


Rich Adamonis, a spokesman for the New York Stock Exchange, said the exchange operator is “disappointed” with the SEC’s lapse.


“From the moment we were informed, we have been actively seeking clarity from the SEC to understand the full extent of the use of improperly secured devices and the information involved, as well as the actions taken by the SEC to ensure that there is proper remediation and a complete audit trail for the information,” he said.


A spokesman for Nasdaq OMX declined to comment on the security lapse at the SEC.


Since the internal investigation was concluded, the SEC initiated disciplinary actions against the people involved, one of the people familiar with the matter said.


The SEC also notified all of the exchanges about the incident.


The SEC’s Trading and Markets Division, which has several hundred staffers, is primarily responsible for overseeing the U.S. equity markets, ensuring compliance with rules and writing regulations for exchanges and brokerages.


Among the division’s tasks is to ensure exchanges are following a series of voluntary guidelines known as “Automation Review Policies,” or ARPs. These policies call for exchanges to establish programs concerning computer audits, security and capacity. They are, in essence, a road map of the capital markets’ infrastructure.


Although they are only voluntary guidelines, exchanges take them seriously.


Under the ARP, exchanges must provide highly secure information to the SEC such as architectural maps, systems recovery and business continuity planning details in the event of a disaster or other major event.


That is the same kind of data used by exchanges last week after Hurricane Sandy forced U.S. equities markets to shut down for two days.


Prior to re-opening, all of the U.S. stock market operators took part in coordinated testing for trading on NYSE’s backup system.


SEC Chairman Mary Schapiro recently said the SEC is working to convert the voluntary ARP guidelines into enforceable rules after a software error at Knight Capital Group nearly bankrupt the brokerage and led to a $ 440 million trading loss.


(Reporting by Sarah N. Lynch; Editing by Karey Wutkowski and Lisa Shumaker)


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