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The news at a glance

Jitters over Cyprus bailout plan;  A hitch in American-US Airways merger; AT&T hacker sentenced to three years; A record fine for insider trading; Feds probe Microsoft over bribery claims

Markets: Jitters over Cyprus bailout planGlobal markets stumbled this week after the European Union announced a controversial plan to tax bank accounts in Cyprus to help pay for a bailout, said Ryan Vlastelica in Reuters.com. The Cypriot parliament’s subsequent rejection of the plan could “put the bailout in jeopardy and raise the risk of default.” In the U.S., the S&P 500 dipped and market benchmarks remained fragile over the plan to seize up to 10 percent of bank deposits to help fund a $20 billion bailout package for the tiny Mediterranean state. But “strong U.S. housing data” limited the downturn, as did the European Central Bank’s standing commitment to preserving the euro. 

What particularly worries investors is the prospect that Cyprus’s tax on bank accounts could spread to other euro zone nations, said Steve Rothwell in the Associated Press. Without a bailout, the debt-ridden island nation faces bankruptcy, but market watchers worried that seizing deposits “could set off panicked withdrawals from banks in other European countries,” creating a devastating ripple effect throughout the region and beyond. “The underlying tone of the market is set to stay jittery,” said Jane Foley, an analyst at Rabobank International, “with investors unnerved about the potential loss of trust between banks and small depositors.” 

Airlines: A hitch in American-US Airways mergerA federal supervisor of American Airlines’ bankruptcy case has raised a red flag over a multimillion-dollar severance package for the airline’s chairman and CEO, said Terry Maxon in The Dallas Morning News. Tom Horton, the carrier’s current CEO, is expected to collect almost $20 million in cash and stock when American merges with US Airways, even though he will be the non-executive chairman of the new company. U.S. Trustee Tracy Hope Davis, whose office is part of the Justice Department, filed an objection to the deal, questioning whether the severance package is “permissible” under federal bankruptcy laws.

Tech: AT&T hacker sentenced to three yearsA security researcher was sentenced this week to 41 months in prison for exposing a security fault that left AT&T’s iPad users vulnerable, said Charles Arthur in The Guardian. Andrew “Weev” Auernheimer was found guilty in November of identity fraud and conspiracy after he revealed the email addresses of 114,000 iPad owners, including CEOs, military officials, celebrities, and top politicians. Auernheimer insisted he broke no laws and hadn’t used the information for personal gain. “I’m going to jail for doing arithmetic,” said Auernheimer.

Hedge funds: A record fine for insider trading SAC Capital Advisors will pay an unprecedented $616 million to settle insider-trading charges with the Securities and Exchange Commission, said Peter Lattman in The New York Times. The $15 billion hedge fund was accused of selling off nearly $1 billion in shares of two pharmaceutical companies after receiving secret information about problems with an Alzheimer’s drug. The settlement, still subject to a judge’s approval, doesn’t affect the ongoing trial of an SAC trader or prevent future charges being brought against the fund’s owner, Steven A. Cohen.

Crime: Feds probe Microsoft over bribery claimsFederal regulators are investigating Microsoft’s ties to business partners that allegedly bribed foreign officials, said Christopher M. Matthews in The Wall Street Journal. The Justice Department and the Securities and Exchange Commission are examining whether Microsoft or its resellers offered kickbacks to Chinese, Italian, and Romanian officials in exchange for government software contracts. The software giant’s general counsel said the company would “cooperate fully in any government inquiries.”

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