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Monthly Archives: January 2014

Spotify

It’s been one week since Spotify announced it would allow anyone on an iOS or Android tablet or smartphone to use its music streaming app free of charge. And, it appears this was a good move for the company as far as growing its listener base. The streaming music service said Thursday that downloads of the app have increased by four times in the last week; this means four times as many people are downloading the app today compared with a week ago. While Spotify would not release specific numbers, it’s likely a hefty amount of people are downloading the app. In March, Spotify said it had surpassed 6 million subscribers, a gain of 1 million since December 2012, but it hasn’t updated its user numbers since then. Spotify also has more than 24 million active users in 55 markets worldwide. A year ago, the company’s service reached only 17 countries.

Read the full story at CNET.

AT&T

Never let it be said that AT&T and Verizon don’t follow each other’s leads. Just one day after Verizon announced it would start publishing a semiannual transparency report that details all of the law enforcement requests it receives, AT&T announced that it would being doing the same in early 2014. The carrier’s report will include info on the total number of law-enforcement data requests received from the government in criminal cases, the number of subpoenas, court orders, and warrants received, and the total number of customers affected. The first report issued should cover all of the requests from 2013. AT&T also reiterated that it ensures all data requests and its responses are “completely lawful and proper in that country” and that it doesn’t allow the government direct connections or access to its network or customer information.

Read the full story at The Verge.

lenovo 520x245 Spy agencies reportedly have a long standing ban on Lenovo PCs due to back door vulnerabilities

Spy agencies in the UK, Australia and the US have internally banned using Lenovo PCs because of remote access vulnerabilities that were discovered during testing, a new report from the Australian Financial Review alleges.

Chinese technology firms have long attracted suspicion from international governments, with telecommunications firms Huawei and ZTE recently coming under suspicion in both the US and UK. Lenovo has grown to become one of the top PC makers, but its popularity with consumers hasn’t translated over to classified government networks.

The ban is believed to extend across the “Five Eyes” group of nations, which includes Australia, Canada, New Zealand, the UK and the US, because their respective intelligence agencies have linked their networks.

While Lenovo hasn’t gone after the required security certifications needed to provide hardware to some of these agencies, AFR’s report suggests there’s more to the situation.

According to the paper, intelligence sources confirmed the ban was instituted in the mid-2000s “after intensive laboratory testing of its equipment allegedly documented “back-door” hardware and “firmware” vulnerabilities in Lenovo chips.”

Details on the discoveries remain classified, but the vulnerabilities allegedly could provide remote access to intruders.

Also of concern is the extent of Lenovo’s ties with the government. China’s Academy of Sciences has a substantial stake in Legend Holdings, Lenovo’s largest shareholder.

Lenovo didn’t immediately respond when contacted by The Next Web, but the company did tell AFR that it did not know of the spy agency ban.

Part of the deep-rooted suspicion of Chinese hardware may come from Western governments’ own interest in creating back doors in their own hardware. For instance, security expert Professor Farinaz Koushanfar told AFR that she had “personally met with people inside the NSA who have told me that they’ve been working on numerous real-world cases of malicious implants for years.” France was also believed to be working on kill switches for its military equipment.

Given that most of this is locked up as classified, we probably won’t ever find out what’s really going on here. Still, given the recent revelations of the deep surveillance structures created by the likes of the NSA, it’s hard not to look at all our technology with a bit of mistrust.

See also: Here’s the letter Apple, Google, Microsoft and others sent to the US government over data requests and UK’s Intelligence and Security Committee says GCHQ is accessing the NSA’s PRISM programme legally

Image credit: Philippe Lopez / Getty Images

Federal grand jury indictment alleges that SAC maintained elite group that has traded on insider information since 1999

A federal grand jury has indicted SAC Capital, the embattled hedge fund that has been pursued by financial authorities for years, for insider trading after regulators failed to charge its powerful founder, Steven A Cohen.

The US attorney who brought the charges, Preet Bharara, also hit the firm with civil money-laundering charges that would require the firm to forfeit potentially billions of dollars in assets.

A 41-page indictment alleges that SAC, founded in 1992, maintained an elite group that has traded on insider information since 1999.

SAC is also alleged to have hired portfolio managers specifically for their insider contact in the industries in which they traded, and failed to raise red flags when insider information was suggested as the basis for a trade.

The indictment marks the culmination of a six-year investigation by Bharara. The government pursued an investigation against Cohen but apparently dropped its attempt to bring charges last month.

“SAC became, over time, a veritable magnet for market cheaters,” Bharara said at a news conference in Manhattan. “That’s why the institution, and not individuals, stand accused of insider trading.” He said that the charges were “a predictable product of pervasive institutional failure”, and added: “A company reaps what it sows. SAC seeded itself with corrupt traders.”

Cohen was not mentioned by name in the indictment but referred to obliquely as “the SAC owner” and an “individual residing in Greenwich, Connecticut.”

“The SAC owner failed to question candidates who implied that their ‘edge’ was based on sources of inside information,” the indictment says. Later, it notes: “The SAC owner fostered a culture that focused on not discussing inside information too openly, rather than not seeking or trading on such information in the first place.”

The government’s case centers on SAC’s culture. It alleges that employees at SAC “engaged in a pattern of obtaining inside information from dozens of publicly-traded companies across multiple industry sectors. Employees …traded on inside information themselves and, at times, recommended trades to the SAC owner based on inside information.”

Under US securities laws, fund managers may only trade on company information that has been publicly disclosed.

The indictment mentions several other SAC employees as well as employees of affiliate investment firms. One portfolio manager for Cohen-controlled Sigma Capital, Wes Wang, is cited in connection with insider trading in eight technology stocks including Taiwan Semiconductor, Cisco, and eBay. In 2012, Wang pleaded guilty to two counts of conspiracy to commit securities fraud.

Other alleged insider trading by SAC Capital mentioned in the indictment includes some of the biggest North American companies, such as Intel, Advanced Micro Devices, BlackBerry maker RIM, and Yahoo.

SAC denied the allegations. It said in a statement: “SAC has never encouraged, promoted or tolerated insider trading and takes its compliance and management obligations seriously. The handful of men who admit they broke the law does not reflect the honesty, integrity and character of the thousands of men and women who have worked at SAC over the past 21 years. SAC will continue to operate as we work through these matters.”

The chief target of the US attorney’s legal strategy, according to experts, is to foil Cohen himself by attacking his deputies and the trading culture of the firm he created. Cohen controls 60% of the money in SAC Capital and has a net worth of roughly $9bn, according to Bloomberg.

The indictment holds that SAC’s trading culture was heavily centralized, with dozens of portfolio managers answering directly to Cohen without knowledge of what their peers in the firm were doing.

Cohen, until his legal troubles, was a towering figure on Wall Street, a billionaire unknown to much of the public but famous in the finance community for his enviable investment profits and casual style. While maintaining an intense work regimen – working at over seven computer screens in his office – he was habitually seen around the firm’s Connecticut trading floor in a blue fleece vest that became almost iconic.

He was known for quirks such as his disdain of ringing phones, which created a silent trading floor, and maintaining the firm’s temperature at a breezy 69F so traders would not be too comfortable.

For investors, he held a notable mystique: SAC was so sought-after by clients that they paid the firm a fee of 3% of the money under management and allowed the firm to take up to 50% of their investment profits, according to the indictment.

SAC seemed to have a green thumb for stocks, watching them gain up to 10% in value in a single day after buying shares, and up to 15% in a month, according to a Wall Street Journal analysis in March.

The swirl of legal issues around insider trading have already temporarily claimed the careers of two of Cohen’s top lieutenants, Michael Steinberg and Mathew Martoma, both of whom were arrested at their homes and subsequently indicted. The government’s case against Martoma accuses him of making a profit of $276m by trading on nonpublic information related to healthcare companies Wyeth and Elan.

Martoma has maintained his innocence. His trial is set for November.

The indictment is the latest in a series of investigations of SAC by regulators such as the Securities and Exchange Commission as well as federal prosecutors.

Most recently, last week the SEC filed civil administrative charges against Cohen, arguing that he “failed reasonably to supervise” Steinberg and Martoma.

In response to the SEC’s charges, Cohen’s lawyers argued, in 46-page white paper to staff, that he was too busy to read his email, and estimated he opened only 11% of his messages. As a result, they held, he could not have acted on insider tips contained in those emails.

Previously, SAC and its affiliates paid a $617.5m fine to settle SEC charges on insider trading, even though a judge grew irritated that the firm would be able to pay money to absolve itself of charges without admitting or denying wrongdoing.

News of overthrown president’s alleged help in 2011 attacks comes as showdown looms between Muslim Brotherhood and opponents

The overthrown Egyptian president, Mohamed Morsi, is under investigation for aiding Hamas attacks on Egyptian security facilities during Egypt’s 2011 revolution, state media reported on Friday, in the first official update on his status since the Islamist was forced from office and detained incommunicado by the Egyptian army on 3 July.

The news came as Egypt held its breath for a showdown on Friday between supporters of the army and Mohamed Morsi’s Muslim Brotherhood.

Millions are expected to fill Egypt’s streets on Friday in support of army chief General Abdel Fatah al-Sisi, who asked on Wednesday for Egyptians to give him a mandate to deal with what he termed terrorism. His speech was seen by sceptics as a thinly veiled attempt to win popular support for a violent crackdown on Morsi supporters. Much of Egyptian media has spent the last month depicting the Muslim Brotherhood and its allies as terrorists. At least seven channels have suspended normal programming to encourage their audience to back Sisi.

With Sisi enjoying widespread popularity, millions are likely to heed his call on Friday by turning out across Egypt – in particular in Cairo’s Tahrir Square – to show their backing for his actions. But their demonstrations also coincide with 35 marches across the capital planned by the Muslim Brotherhood, raising the possibility of serious factional fighting. The Muslim Brotherhood’s leader, Mohamed Badie, heightened tensions further on Thursday by claiming that Sisi’s overthrow of Morsi – following days of mass protests – was a more heinous crime than the destruction of Islam’s most sacred shrine.

According to state media, Morsi is under investigation for colluding with the Palestinian Islamist group Hamas, an offshoot of the Muslim Brotherhood, during the 2011 uprising that toppled former dictator Hosni Mubarak. It is alleged that Morsi and other senior Muslim Brotherhood figures were rescued from jail during the revolution with help from Hamas, and then helped the Palestinians attack Egyptian police facilities during Mubarak’s removal. The Muslim Brotherhood says the fugitives left with the help of locals – and that Hamas had no role in the 2011 uprising.

“It’s laughable,” said Gehad al-Haddad, a spokesman for the Muslim Brotherhood, reacting to the news. “It’s every crime that you would think of if you were looking at the 2011 revolution through the eyes of Hosni Mubarak. It’s retaliation from the Mubarak state.”

Haddad’s argument spoke to the belief that Morsi’s overthrow has enabled the return of Mubarak-era officials and institutions sidelined by the 2011 revolution.

The decision by Egypt’s judiciary to focus their investigations against Morsi on allegations from before his presidency began, rather than on human rights violations that occurred during the presidency itself, indicates that they may be wary of implicating state institutions such as the police, who were also complicit in the torture and killing of protesters under his tenure.

Since Morsi’s overthrow, parts of Egypt have been hit regularly by violent protests and counter-protests by those supportive and opposed to his rule. More than 200 Egyptians have already died in clashes between Morsi supporters, opponents and security forces since protests against the ex-president began in late June. Contrary to local media reports, which blame the Brotherhood almost entirely for the unrest, all sides have been party to violence – not least the state. On 8 July, police and soldiers massacred 51 pro-Morsi supporters at a rally outside a military compound in east Cairo.

In turn, Morsi’s opponents claim his armed supporters have started other fatal fights – in particular while marching provocatively through neighbourhoods south of Tahrir Square, the cradle of anti-Morsi dissent.

The fighting accompanies a surge in militancy in Sinai – long considered a hotbed of extremism – and a rise in sectarian attacks on Christians in southern Egypt.

Sisi’s callout this week is seen as an attempt to get the Brotherhood to leave the streets. Brotherhood leaders are frightened of doing so because they fear an escalation of the current crackdown against senior figures within their group, as exemplified by Friday’s charges against Morsi.

Leaving the streets without securing Morsi’s return to presidency – the Brotherhood’s core albeit perhaps delusional demand – would also cost them significant credibility among supporters.

“It means doing the thing that the Brotherhood can’t and won’t do right now – giving up their claims to legitimacy,” said Shadi Hamid, director of research at the Brookings Doha centre, and an expert on political Islam.

“They’ve been telling their supporters that legitimacy is something worth dying for. They can’t just change their minds overnight.”

An unnamed second photographer faces formal scrutiny under French invasion of privacy laws

A photographer suspected of taking topless photographs of the Duchess of Cambridge while she was on holiday in the south of France has been placed under formal investigation, according to AFP.

The unnamed photographer is the latest of several media figures to be investigated for invasion of privacy in France after pictures were published in September last year of Prince William and his wife sunbathing on a balcony in a private property in the south of France.

The editor of the French magazine Closer, Laurence Pieau, had already been placed under formal investigation earlier this month, Agence France Presse reported.

In April, the head of the publisher of the French edition of Closer magazine, named as Ernesto Mauri, and another photographer suspected of taking pictures of the holidaying royal couple were put under investigation, the last step in France before being charged.

The topless photos emerged last September, and most British outlets refused to publish them in the wake of the Leveson report. French Closer did publish them and St James’s Palace launched legal proceedings against the magazine, one of the first instances of a case like this involving the royal family in modern times. The complaint from St James’s Palace sparked a criminal investigation in France.

The Duke and Duchess launched criminal proceedings against the photographer under France’s strict privacy laws. A French court granted them an injunction in September preventing Closer from publishing further shots of Kate sunbathing topless. The pictures were apparently taken on the terrace of a guest house during a brief holiday in France last year.

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Democrat congressman Alan Grayson says hearing will help to stop ‘constant misleading information’ from intelligence chiefs

Congress will hear testimony from critics of the National Security Agency’s surveillance practices for the first time since the whistleblower Edward Snowden’s explosive leaks were made public.

Democrat congressman Alan Grayson, who is leading a bipartisan group of congressman organising the hearing, told the Guardian it would serve to counter the “constant misleading information” from the intelligence community.

The hearing, which will take place on Wednesday, comes amid evidence of a growing congressional rebellion NSA data collection methods.

On Wednesday, a vote in the House of Representatives that would have tried to curb the NSA’s practice of mass collection of phone records of millions of Americans was narrowly defeated.

However, it exposed broader-than-expected concern among members of Congress over US surveillance tactics. A majority of Democrat members voted in support of the amendment.

Grayson, who was instrumental in fostering support among Democrats for the the amendment, said Wednesday’s hearing would mark the first time critics of NSA surveillance methods have testified before Congress since Snowden’s leaks were published by the Guardian and Washington Post.

“I have been concerned about the fact that we have heard incessantly in recent weeks from General Keith Alexander [director of the NSA] and Mr James Clapper [director of National Intelligence] about their side of the story,” he said. “We have barely heard anything in Congress from critics of the program.

“We have put together an ad hoc, bipartisan hearing on domestic surveillance in on the Capitol. We plan to have critics of the program come in and give their view – from the left and the right.”

Grayson said the hearing had bipartisan support, and was backed by the Republican congressman Justin Amash, whose draft the amendment that was narrowly defeated.

“Mr Amash has declared an interest in the hearing. There are several others who have a libertarian bent – largely the same people who represented the minority of Republicans who decided to vote in favour of the Amash amendment.”

The hearing will take place at the same time as a Senate hearing into the NSA’s activities. That will feature Gen Alexander and possibly his deputy, Chris Inglis, as well as senior officials from the Department of Justice and FBI.

The simultaneous timing of the hearings will lead to a notable juxtaposition between opponents and defenders of the government’s surveillance activities.

“Both Congress and the American people deserve to hear both sides of the story,” Grayson said. “There has been constant misleading information – and worse than that, the occasional outright lie – from the so-called intelligence community in their extreme, almost hysterical efforts, to defend these programmes.”

Although not a formal committee hearing, Grayson’s event will take place on Capitol Hill, and composed of a panel of around a dozen members of Congress from both parties.

Grayson said those testifying would include the American Civil Liberties Union as well as representatives from the right-leaning Cato Institute.

“They are both going to come in and make it clear that this programme is not authorised by existing law – and if it were authorised by existing law, that law would be unconstitutional,” Grayson said.

The congressman added that Glenn Greenwald, the Guardian journalist who first revealed details of the surveillance programmes leaked by Snowden, had also been invited to testify via video-link from his base in Rio.

“Even today, most people in America are unaware of the fact the government is receiving a record of every call that they make, even to the local pizzeria,” Grayson said.

“I think that most people simply don’t understand that, despite the news coverage, which my view has been extremely unfocused. There has been far too much discussion of the leaker, and not enough discussion of the leak.”

Train driver Francisco Jos Garz n, 52, arrested
Black box data crucial in finding out why train was speeding
Seventy-eight killed in crash near Santiago de Compostela

The black boxes from the high-speed train that hurtled off the tracks in north-west Spain have been recovered from the wreckage and handed to investigators, officials say.

The recorders, which register speed, distances and other data, are crucial to resolving the mystery of why the Alvia 151 shot into a tight bend in the approach to Santiago de Compostela at more than twice the approved speed.

Police in Santiago de Compostela said the driver of the train, 52-year-old Francisco Jos Garz n, had been under arrest since Thursday evening.

El Pa s reported that Garz n had received an order to reduce speed just seconds before the crash, and acknowledged it by pressing a button in the drivers’ cab. It remained unclear whether he had been unable or unwilling to brake the train, which was running five minutes behind schedule.

A spokeswoman for the courts in Santiago del Compostela, Mar a Pardo R os, confirmed on Friday that the train’s “black boxes” had been found, but did not indicate how long the analysis would take.

Police revised the death toll on Thursday to 78, but said the count could change as body parts were identified. Antonio del Amo, head of the Spanish national police’s central forensic unit, said 78 bodies had been recovered, together with numerous body parts. He said that six of the corpses had yet to be identified.

The city’s police chief, Jaime Iglesias, said Garz n would not be interrogated on Friday.

Garz n was led from the scene of the tragedy with his face covered in blood. He was given nine stitches to a head wound, but was otherwise apparently unharmed.

The driver spent the night in hospital with his mother at his bedside and under police guard. Contacted by telephone by the regional newspaper, La Voz de Galicia, Garz n refused to comment beyond saying “You [can] imagine how I am.”

In a recorded call to the emergency services shortly after the disaster, Garz n reportedly said: “I should have been going at 80 [km/h] and I am [sic] going at 190.” He reportedly added: “Let’s hope there aren’t any dead.”

Garz n reportedly tested negative for alcohol following the crash.

Colleagues described Garz n as an experienced railwayman who had worked for Spain’s national rail company, Renfe, for around 30 years. He had been a driver since 2003. The company’s president, Julio G mez-Pomar Rodr guez, said Garz n, from Monforte de Lemos, also in Spain’s north-west, had worked on the Ourense to Santiago stretch of the high-speed network where the accident took place for more than a year.

Garz n’s position was compromised by the emergence of a photograph that he posted to his Facebook page showing his speedometer at 200km/h. It was not clear if, when the photograph was taken, he was on a stretch of the network where high speeds were permitted.

It nevertheless surprised Garz n’s friends. One wrote: “You’re going like the bloody clappers, lad. Brake.” The driver replied: “I’m at the limit. I can’t go faster, otherwise they’ll fine me.”

The daily El Mundo, which first published the photograph and the exchange of messages on its website, said that they had been removed from Garz n’s Facebook page.

The accident took place just after the point at which one safety system gives way to another. For the first 80km after Ourense, the line is ostensibly governed by the EU-sponsored European Rail Traffic Management System (ERTMS), which would have braked the train automatically. However, on the approach to Santiago de Compostela station the track is subject to Spain’s ASFA system. This will stop a train altogether, but only if it is travelling at more than 200km an hour.

At lower speeds, warning signals are emitted. But it is left to the driver to implement them.

The train derailed just a few hundred metres beyond the cut-off point for the ERTMS, raising the question of why the system did not intervene to brake the train earlier.

El Pa s quoted a government source as saying that, even on the stretch of the line on which the ERTMS had been installed since November 2011, it was not used. No reason was given.

According to Renfe, there were 218 passengers and five railway staff on the train involved. It is Spain’s worst rail accident for more than 40 years. By late on Friday morning, 83 people were still in hospital, with 32 of them on the critical list.