SEC rejects $18M deal with Falcone, hedge fund

WASHINGTON — The Securities and Exchange Commission has rejected an $18 million settlement that would have banned billionaire hedge-fund manager Philip Falcone from the securities industry for two years.

Falcone and Harbinger Capital Partners were told Thursday that SEC commissioners voted down the settlement, according to a filing Friday by parent company Harbinger Group Inc. The SEC's enforcement staff had proposed the deal in May.

The deal sought to settle civil fraud charges by fining Falcone and hedge-fund firm Harbinger Capital $18 million. The SEC has accused Falcone and the firm of using fund money to pay his taxes and favoring some clients over others.

The filing didn't say why the deal was rejected. SEC votes on enforcement actions occur in closed sessions.

Spokesmen for the SEC and Falcone declined to comment.

As part of the deal, Falcone and the firm neither admitted nor denied the allegations. It also allowed him to continue to own Harbinger Capital, although the firm would have been overseen by an independent monitor.

Falcone is also CEO and chairman of Harbinger Group, a publicly traded company that sells Rayovac batteries, George Foreman grills and Farberware appliances.

In a lawsuit filed in June 2012, the SEC alleged that from 2006 through early 2008, Falcone manipulated the market for high-yield, high-risk bonds issued by a company called Maax Holdings Inc. Using fund money, Falcone bought many of the bonds to shrink the supply on the market and drive up prices, the SEC said.

The SEC also said Falcone and Harbinger Capital secretly gave some investors in his fund the right to cash out of their holdings. In exchange, the favored investors gave Falcone and the fund permission to bar the other investors from being able to cash out, according to the SEC. It said that arrangement was hidden from Harbinger's directors.

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FAA wants Dreamliner transmitters inspected

WASHINGTON — Airlines should inspect the emergency locator transmitters of all Boeing 787 "Dreamliners," the Federal Aviation Administration urged Friday following a fire earlier in the week aboard one of the airliners while parked at London's Heathrow Airport.

British aviation authorities, who are investigating the fire on an Ethiopian Airlines 787, have said the transmitters should be disabled after finding that one of the squat orange boxes was the only thing with enough power to start a fire in the plane's tail section, which was scorched.

The FAA made no mention Friday of disabling the transmitters in a brief statement provided to the media. Instead, the agency said that after reviewing the British investigators' recommendations, U.S. officials have begun working with Boeing to develop instructions for how airlines should conduct the inspections.

The inspections would ask airlines to examine transmitters for proper wire routing and damaged or pinched wires, the statement said. The transmitter's lithium battery compartment would be inspected for heat or moisture.

An order making the inspections mandatory for U.S. operators is expected in the coming days, the FAA said.

FAA safety orders apply only to operators of U.S. registered planes, but aviation authorities in other countries are expected to follow with their own orders for inspecting or disabling the transmitters.

Boeing has delivered 68 of the planes worldwide so far, all with the same transmitter made by Honeywell International Inc. United Airlines is the only U.S. operator of the planes, with six.

Britain's Thomson Airways, which has six 787s, said on Thursday that it had already removed the emergency locator transmitters from its 787s. It said its 787 flights would still operate as planned. "This is not a Boeing 787 technical issue," the airline said, but an issue with the transmitter made by Honeywell.

As Honeywell reported financial results on Friday, an analyst asked CEO David Cote how it would be possible for such a relatively small transmitter to cause a fire like the one in the 787 at Heathrow. Cote didn't answer directly, but said he wants to wait and see what the final investigation finds.

"We'll just wait to find out what actuals are, and respond to it then," he said. "There's no significant financial impact to Honeywell in any way."

British investigators have said it is not clear if the fire was caused by the transmitter's lithium-manganese dioxide batteries or a short near or around the transmitter. A spokeswoman for the investigative branch said the easiest way to make the transmitter systems "inert" — as set out in their recommendations — would be to take out their batteries.

Honeywell has made 6,000 of these transmitters and they're used in a wide range of planes. The actions announced by the FAA, however, apply only to 787s.

The transmitters have logged 50 million hours of flight on planes other than the 787 with few reports of incidents, and none as serious as the London fire, an official familiar with the transmitters' history said. The official, who wasn't authorized to speak publicly, asked not to be named.

The locators are activated in a crash and send a signal that satellites use to calculate the location of the plane. They're most helpful when a plane crashes in a remote area on land, making it difficult for rescuers to find the wreckage. They're of little value in accidents where a plane is underwater or where the location of the plane is clear, such as the crash landing of an Asiana Airlines plane at San Francisco International Airport two weeks ago.

The 787 is Boeing's newest and most technologically advanced plane. It's the first airliner with a skin made mostly of lightweight composite materials. It relies far more than other airliners on electrical systems to operate. And it is the first airliner to make extensive use of rechargeable lithium ion batteries.

The plane is key to Boeing's future, but it has been plagued with problems. The entire 787 fleet was grounded for about three months earlier this year after a fire in a battery unrelated to the transmitter on a Japan Airlines 787 parked at Boston's Logan International Airport, and another smoking battery that led to an emergency landing by an All Nippon Airways 787 in Japan.

U.S. and Japanese authorities are still investigating the two incidents, but have reached no conclusion on the cause of the battery failures.

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Freed reported from Minneapolis.

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Follow Joan Lowy on Twitter at http://www.twitter.com/AP_Joan_Lowy

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Squantum home’s a day at the beach

If you want to feel like you're on vacation year round, this waterfront house for sale in the Squantum neighborhood of Quincy comes complete with deeded access to a private beach.

Built in 2008 by Realtor/owner Theresa Repoff, the three-bedroom single family at 173 Huckins Ave. in Squantum is about 100 feet from the ocean and has water views from most rooms. It's also one of nine neighboring houses that have deeded access to private Sunrise Beach.

The 3,100-square-foot home with Brazilian cherrywood floors throughout, a third-floor family room, three outdoor decks and a basement wine cellar is on the market for $1,195,000. The second-floor master bedroom and the entire top floor have unobstructed ocean views.

The house, which goes front to back from Huckins Avenue to Sunrise Road, has a three-vehicle garage underneath it, with doors opening out to both streets. It has bushes in front along with front, side and back lawns.

A granite paver walk leads to a covered porch and into a cherrywood foyer with a double-door closet.

To the left is a floor-through, recessed-lit living and dining area with crown molding and three large sets of triple windows with transoms above that bring in lots of light and have ocean views, although the house next door blocks sight lines. A gas fireplace with a granite surround separates the living and dining space. At the end of the dining area sit glass doors that lead out to a private rear deck that looks out to the beach.

The dining area segues into a recessed-lit kitchen with 25 white-painted beadboard-styled cabinets above and below greenish blue granite counters with a multicolored glass mosaic tile backsplash. There's a granite-topped central island with a four-burner Bosch stainless-steel gas cooktop. The refrigerator and dishwasher are also Bosch stainless-steel.

Also on this floor is a half bathroom with white marble floors and counters over an antique vanity.

The home's three cherrywood bedrooms are on the second floor, reached via a turning staircase.

The sunny master suite features a three-part window with unobstructed ocean views and glass doors out to a private deck. There's a large walk-in closet with built-in storage as well as a double-door closet. The en-suite ceramic-tiled master bathroom has a walk-in shower and double-sink vanity with creme marble countertops.

There are two other bedrooms on this floor — ideally sized for children — as well as another full ceramic-tiledx bathroom. Opposite the bath, behind a frosted glass door, is a laundry room with ocean views.

The entire third floor of the home is a cherrywood-floored family room, ideal for entertaining with its private outdoor deck with unobstructed ocean views. There's a vaulted ceiling here, lots of windows, a skylight and even a built-in electric fireplace.

The basement has a finished wine cellar and direct access to the garage. There's also a lot of extra storage space in the unfinished areas.

The home has two gas-fired heating and central air-conditioning systems.

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Wall Street shrinking tech giants’ share prices

The tech sector is fizzling as big-name companies continue to struggle on Wall Street as earnings reports come in lower than expected.

Microsoft fell the most in more than four years after the company wrote off nearly $1 billion on its new tablet computer and reported declining revenue for its Windows operating system.

The Surface RT, Microsoft's tablet, has not had close to the success that Microsoft had hoped, spurring the company to cut prices by $150. 
Microsoft dropped $4.04, or 
11.4 percent, to $31.40 after reporting its earnings late Thursday.

That's the biggest one-day decline since the stock slumped 11.7 percent in January 2009.

Google dropped after its revenue fell below analysts' forecasts, partly because the Internet search leader's ad prices came in lower than expected. The most significant factor was revenue from mobile ads, which still lags behind other Internet ads in terms of profit.

Google fell $14.08, or
 1.5 percent, to $896.60.

"You have a lot of companies that were priced for perfection," said Max Wolff, senior analyst & chief economist at Greencrest Capital. "Neither of them met expectations."

Despite the market's upswing this month, there has been a growing list of poor tech company results.
 Intel and eBay also reported weak results this week, and chipmaker Advanced Micro reported a second-quarter loss because of a worldwide slump in PC demand.

Apple and Samsung phone sales have slowed, largely because the market is already saturated with smartphone owners.

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Arthur DeMoulas fits Market Basket to a T

Market Basket shoppers, workers and shareholders dodged a bullet Thursday when the grocery chain's board backed away from a proposal to fire CEO Arthur T. Demoulas, according to a former independent board member.

"There's no question in my mind that if they remove Arthur T. Demoulas as president, the value of the company will go down significantly," said Charles Roazen of Weston, who in June ended a 14-year tenure on the Tewksbury company's board. "He's an excellent operator. It would be a shame if they disrupted the culture of the company, which respects its employees ... (and) customers."

Market Basket took good advantage of a nose-diving real estate market to increase its store count and market share while remaining profitable, according to Roazen, who was elected to the board after a 1999 court order mandated three independent directors.

During a nearly 13-hour meeting Thursday in Andover, the current Market Basket board failed to act on an agenda item motioning for Demoulas' removal. Shareholders led by cousin Arthur S. Demoulas were hoping to wield new power after the June election shifted a board majority to their favor.

Arthur T. Demoulas, in a statement after the meeting, said he hoped to work constructively with the board going forward.

A spokeswoman for Demoulas had no further comment yesterday, and Arthur S. Demoulas, other shareholders and board members did not return calls for comment.

CEO since 2008, Arthur T. Demoulas is credited with increasing the 71-store chain's revenue from 
$2.48 billion in 2007 to 
$4 billion in 2012, when net income was $217 billion. And he remains well-respected in the industry, said Kevin Griffin, publisher of the Griffin Report of Food Marketing.

"He's knowledgeable, and he's a steward for a family business that has a model that works," Griffin said. "Profits are more than above average."

Employees' efforts on Demoulas' behalf — including petitions and newspaper ads — likely influenced the board, he said.

U.S. Rep. Niki Tsongas (D-Mass.) was pleased with the outcome: "... People travel from afar to take advantage of (Market Basket's) tremendous savings, the impact of which can't be understated in the daily lives of residents throughout the region. Market Basket has never stopped growing since its formative days in Lowell. ... All of this has been made possible under the leadership of Arthur T. Demoulas."

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Crushing on my Candy addiction

The formula for consistent social media profits has been cracked, or perhaps more accurately, crushed. Unfortunately, the solution is eating my soul.

Let me back up. "Candy Crush Saga" is the most popular social media game ever, and the most addictive. A baffling 190 million people worldwide are using it. The Candy got me during a recent cold, when I was laid up and wondering, "What is this Candy Crush thing that I keep seeing on Facebook?"

It looked harmless enough at first. Rows of shiny little gumdrops and jelly beans, and all you have to do is arrange three in a row of the same color.

The first several rounds were a breeze, and I could see how my score stacked up against my Facebook friends — so many of them playing this game, and such a strange cross-section. The mommy/part-time engineer, the owner of a dance school, the do-nothing basement dweller, the high school math teacher — many ages and genders represented here.

Then my first Candy Crush hurdle: I had run out of lives. Oh well. Time to start over. But wait … I have to wait 20 minutes to earn another life, or I can pay 99-cents for a full set? Well, just this one time …

There's another way to get lives: You can beg friends for them. It forces you to connect and commiserate with friends.

And therein lies the genius formula. The route to instant gratification costs money, and they provide an instant circle of equally wayward friends to cheer you on.

Analysts believe this fad will live on far longer than previous runaway hits like "Farmville," "Texas Hold 'Em" and "Words with Friends." For starters, the rules are far simpler. There is no learning curve. And rather than pushing out sequels and add-ons, the makers of "Candy Crush Saga," a European company called King, have vowed to keep the game constantly evolving. And some of the levels are so difficult that winning feels like an accomplishment.

One of my friends was stuck on the same level for 30 days. "Sadly, I still played it several times a day," she reports. There's something about these colorful little candies.

I'm sure the fine folks at King consulted industrial psychologists in their quest to create an addiction. What better way than to tap into society's disgusting love/hate relationship with sugary treats?

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The Ticker

Demolition to make way for Millennium Tower

This weekend Suffolk Constructon will demolish the remainder of a 1905 building at the corner of Franklin and Hawley streets that housed part of Filene's. This will allow developer Millennium Partners to begin work on the 625-foot Millennium Tower, which will include 600 condominiums and apartments, about 218,000 square feet of office space and 231,000 square feet of retail.

SEC files charges against
 hedge fund founder Cohen

The Securities and Exchange Commission leveled its most direct shot against billionaire hedge-fund manager Steven A. Cohen yesterday by filing civil charges that accuse him of failing to prevent insider trading.

The SEC alleged that Cohen, who founded and runs SAC Capital Advisors, failed to prevent two of his portfolio managers from illegally reaping profits and avoiding losses of more than $275 million. Both managers provided information to Cohen that suggested they had access to inside information, the SEC said. But rather than raise any red flags, Cohen praised one of the managers and rewarded the other with a 
$9 million bonus, the SEC said.

Calif. judge finalizing deal
in Toyota acceleration cases

A California judge said yesterday that he's finalizing a settlement worth more than $1 billion in cases in which motorists say the value of their Toyota vehicles plunged after recalls over claims they unexpectedly accelerated.

U.S. District Judge James Selna said he was approving the deal that was announced in December and will affect 22 million consumers.

• Grossman Marketing Group, a print and promotional products company headquartered in Somerville, has announced the hiring of Al Maloney as an account executive who will work out of the company's Somerville office. Maloney's primary responsibility will be to generate new business opportunities throughout the Northeast, including Western Massachusetts and Upstate New York.
• Metabolix Inc. a bioscience company delivering sustainable solutions to the plastics, chemicals and energy industries, announced that Johan van Walsem has been promoted to the position of chief operating officer. In this newly created role, Van Walsem will be responsible for the management of the company's biopolymers, biobased chemicals and crops businesses, as well as the key functional areas that enable these businesses to perform.
• HomeStart has announced the addition of Kate Jordan as the new housing search director. In this role, Jordan will assist homeless individuals and families who are currently being housed in shelters with locating permanent and affordable housing. Jordan will work with HomeStart's management team to oversee the agency's long-term planning goals and assist with the development of programs.

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Value shoppers turn to used cars

With used-car prices falling and the quality of late-model cars improving, buyers are now getting a lot more bang for their buck.

Recent redesigns, especially in the midsize- and compact-sedan segments, have left the used-car market full of vehicles that were on the cutting edge several years ago, but at lower prices now.

Those cars have helped to create "some of the best product we've seen in the industry in years" said Alec Gutierrez, an analyst for Kelley Blue Book. "These vehicles are significantly improved over the models they are replacing."

"If the new-car prices are out of your budget and you're looking to buy used to save a few dollars, used cars the past few years are really good products," said Richard Arca, used car analyst at Edmunds.com. "If you take a look now, the manufacturers made huge strides in improving their product" in the past few years.

To make the deal even sweeter, used-car prices are down 6 percent from their peak in May 2011. The average price for a used car at auction was $11,031 in June, according to Manheim, an auction company, and experts don't expect prices to rise soon.

"Prices will continue to soften at a faster rate," Arca said.

"Now is definitely as good a time as any" to buy a used car, Gutierrez said.

Analysts said the quality of used cars has been instrumental in keeping the entire auto sales business afloat.

"Nearly every vehicle in the industry has so significantly improved that it's helped to shore up the industry," Gutierrez said.

Here are some of the top used cars that have been dramatically redesigned over the past few years:

2011 Hyundai 
Sonata

Replacing the fifth-
generation Sonata introduced in 2005, the '11 was introduced to rave reviews. Kelley Blue Book called the stylish mid-sized sedan a "towering home run" in its review. The redesign brought an entirely new look to the car, along with value, quality and a world-class powertrain.

2011 Kia Optima

The previous iteration of the Optima, a bland, boring car with few attractive features, was replaced by this heavy-hitter. Packed with amenities, this mid-sized sedan comes with improved styling over older models and new (at the time) tech features, including Bluetooth connectivity, an iPhone audio input and a glove box that will keep drinks cool.

2012 Ford Focus

This compact got a new look in 2012, but also packs more quality, features and options. Also available as a 5-door hatchback for the first time, the Focus boasts a stronger unit-body structure and a completely retuned suspension. Premium comfort features include MyFord Touch infotainment and standard dual-zone climate control.

2011 Chevrolet Cruze

The Cruze marked the beginning of Chevy's turnaround, and for good reason. While not technically a redesign, the Cruze replaced the Cobalt in Chevy's lineup. The compact has an impressive 36 mpg, and the price to back it up. Superficially, the car is attractive inside and out.

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Obama commends work of consumer protection agency

WASHINGTON — President Barack Obama is commending the work of a consumer protection agency created after the economic crisis.

The Consumer Financial Protection Bureau got its first permanent director this week after the Senate voted to install Richard Cordray after years of delay.

In his weekly radio and Internet address, Obama says consumers can go to the agency to "get some measure of justice" when financial institutions disregard the rules.

He says the bureau has addressed more than 175,000 complaints and has helped recover more than $400 million in refunds for consumers.

In the Republican message, Reps. Todd Young of Indiana and Tim Griffin of Arkansas are calling on the Democratic-controlled Senate to vote on bills passed by the House to delay requirements on individuals and businesses by Obama's health care law.

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Online:

Obama address: www.whitehouse.gov

GOP address: http://www.gop.gov/

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Italy: 5 convicted for Costa Concordia shipwreck

GROSSETO, Italy — Five employees of an Italian cruise company were convicted Saturday of manslaughter in the Costa Concordia shipwreck that killed 32 people, receiving sentences of less than three years that lawyers for victims and survivors criticized as too lenient.

The guilty verdicts for multiple manslaughter and negligence were the first reached in the sinking of the cruise liner carrying more than 4,000 crew and passengers near the Tuscan shore in January 2012.

The ship's captain, the only remaining defendant, was denied a plea bargain and is being tried separately. He faces up to 20 years, if convicted of manslaughter, causing the shipwreck and abandoning the ship.

On Saturday, lawyers representing the 32 victims of the shipwreck said the sentences of the plea bargain — a fraction of what is usually handed down for manslaughter — were inadequate given the gravity of the disaster.

"It seems like a sentence for illegal construction," said lawyer Massimiliano Gabrielli. "It's an embarrassment."

Another lawyer for victims, Daniele Bocciolini, called the sentences "insufficient" and questioned the prosecutors' hypothesis placing the lion's share of the blame on Capt. Francesco Schettino.

The five employees of the Costa Crociere SpA cruise company were charged for their respective roles in the nautical maneuver that put the ship in peril, evacuation and response to the emergency.

The longest sentence went to the company's crisis coordinator, who was sentenced to two years and 10 months. Concordia's hotel director was sentenced to two years and six months, while two bridge officers and a helmsman got sentences ranging from one year and eight months to one year and 11 months.

The bridge officials and helmsman were also convicted of a charge of causing a shipwreck, in addition to multiple manslaughter and negligence.

The court's reasoning for its decision will be released within 90 days, as is standard in Italy.

Prosecutors accused the crisis coordinator, who wasn't aboard the ship, of downplaying the severity of the emergency and delaying adequate response, while the hotel director was charged for his role in the evacuation, described by passengers as chaotic.

The helmsman was blamed for steering the ship in the wrong direction after Schettino ordered a corrective maneuver.

Prosecutor Francesco Verusio said the convictions confirmed investigators' version of events.

"I don't think there are any more doubts about the responsibility that falls above all on the shoulders of Schettino," Verusio said.

Schettino is charged with manslaughter for causing the shipwreck off the Tuscan island of Giglio and abandoning the vessel with thousands aboard. That trial opened this week, and was continued after two hearings until the end of September.

The Concordia, on a week-long Mediterranean cruise, speared a jagged granite reef when, prosecutors allege, Schettino steered the ship too close to Giglio's rocky shores as a favor to a crewman whose relatives live on the island. Schettino has denied the charges and insisted that the rock was not in nautical maps.

The reef sliced a 70-meter-long (230-foot) gash in the hull. Seawater rushed in, causing the ship to rapidly lean to one side until it capsized, then drifted to a rocky stretch of seabed just outside the island's tiny port.

Survivors have described a delayed and confused evacuation. The bodies of two victims were never found, but they were declared dead after a long search.

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Barry contributed from Milan.

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