Naomi Gleit helps keep Facebook growing

The gig: As senior director of Facebook Inc.'s growth, engagement and mobile team, Naomi Gleit helps grow the social network's 1-billion-plus user base.

Facebook employee No. 29: Few people outside Facebook have heard of Gleit, but she's the second-longest-serving Facebook employee, after Facebook founder Mark Zuckerberg. Gleit, 29, talked her way into a job at Facebook on July 18, 2005 — her birthday. She was Facebook's 29th employee, coming on board shortly after the company hit 1 million users and before anyone had an inkling of the colossus it would become.

Dogged spirit: Unlike most other early employees who eventually dispersed to seek new fortunes, Gleit says she has no intention of leaving Facebook. She gets that tenacity from her "tiger mom," a computer programmer who ferried her to ballet, piano, karate and Chinese lessons, and her Jewish father, an immigration lawyer who took her to Hebrew school, she said. "I know it sounds completely irrational, but I had no doubt in 2005 that Facebook would be something incredible in the future," she said.

Rival social networks: Her passion for Facebook began before she was hired, when she was a Stanford undergraduate studying science, technology and society, an interdisciplinary major. She wrote her senior thesis on why Facebook beat out rival college social networking site Club Nexus at Stanford. (Club Nexus was started by Stanford student and Turkish software engineer Orkut Büyükkökten, who went on to create Orkut, Google's first attempt at a social network.) Getting in on the ground floor at Facebook made her feel like she was taking part in something bigger than herself, the same feeling she got volunteering for six months in a refugee camp in Botswana, she said.

Growing with Facebook: Gleit helped Facebook push beyond colleges to high schools and eventually to everyone. In late 2007, when the torrid growth pace temporarily cooled, Zuckerberg tapped a team of five to reignite it and asked Gleit to lead product management. It fell to the growth team to identify the obstacles to the company's momentum. In a company ruled by engineers, Gleit, who never studied programming, earned respect with her analytical approach and intuitive understanding of people. "I always believed that growth was the most important thing, the most important way to impact the company," she said. There are now more than 150 people on the team. "It's been an incredible learning experience," she said. "Each year is different."

That magic moment: Those who work closely with Gleit say part of her success early on was her ability to seize on the "magic moment" that makes users fall in love with Facebook. She made it simpler to sign up, and she helped people find friends as soon as they joined. She also helped Facebook spread quickly to new countries by enlisting users to translate the service into more than 80 languages. Gleit helps her team parachute into new markets and traverse less-familiar languages and cultures. It's something that comes from her own passion to see the world and have new experiences. She has taught on a Navajo reservation and lived in a Buddhist monastery in Thailand.

One billion users: Around noon Sept. 14, Zuckerberg gathered with Gleit and dozens of employees in front of a big screen as the number of Facebook users crossed 1 billion. "The scale was insane," she said. "But that is not the goal. When Mark talks about his vision for Facebook, he talks about being able to connect everyone in the world to the people that they care about and provide some value for them every single day."

A problem solver: Zuckerberg calls on Gleit for high-profile projects. In May 2010, when Facebook was under siege because of how it was handling users' personal information, he put Gleit in charge of simplifying privacy settings. Last year she worked on a popular feature that lets users subscribe to a News Feed without having to become Facebook friends.

Betting on mobile: Now Gleit is focused on the future: mobile devices and how they can unlock emerging markets. Gleit knew back in 2011 that people would begin to log on to Facebook from mobile devices in greater numbers than from desktops, particularly in the developing world. So she traveled to Tel Aviv to buy Snaptu, which makes software that helps people on low-tech phones access Facebook, and she brought the whole team back to Silicon Valley with her. Now Facebook is surging in popularity on mobile devices in Tokyo and Nairobi, Kenya. "I have always been interested in technology and how it can be used to improve lives," Gleit said.

jessica.guynn@latimes.com

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This bus' next stop: doing good

Maybe you want to help others. Maybe you long to lend a hand. But you're not sure where and you're not sure how and you don't know who to call.

You could ask around. Or you could book a seat on the Do Good Bus.

You will pay $25. You will get a box lunch. You will put yourself in the hands of a stranger.

When the bus takes off, you will not know where you are going — only that when you get there, you will be put to work.

You find yourself on this weekday afternoon one of an eclectic group, gathered a little shyly on an East Hollywood curb.

There's a Yelp marketer, a grad student, an actor, a novelist, a Manhattan Beach mother with her son and daughter, who just got home from prep school and college.

You see a school bus pull up. You step on board. It feels nostalgic, like day camp or a field trip.

Rebecca Pontius welcomes you, wearing jeans and sneakers and a black fleece vest. She looks like the kind of person who would plunge her hands deep into dirt, who wouldn't be afraid of the worms, who could lead you boldly.

The bus takes off, and Pontius stands toward the front, sure-footed. She founded the Do Good Bus, she tells you, to 1) build awareness, 2) build community, 3) encourage continued engagement.

Oh, she says, and to 3a) have fun. Hence the element of mystery, the faux holly branches that decorate some of the rows of seats, the white felt reindeer antlers she's wearing on her head.

She smiles a wide, toothy smile that makes you automatically reciprocate.

So you go along when she asks you to play get-to-know-you games. Even though you're embarrassed, you don't object when she assigns you one of the 12 days of Christmas to sing and act out when it's your turn.

Everyone's singing and laughing as the bus fits-and-starts down the freeway.

Maids-a-milking, geese-a-laying, bus-a-exiting somewhere in South Los Angeles.

It stops outside a boxy blue building — the Challengers Boys and Girls Club — where, finally, Pontius tells you you'll be helping children in foster care build the bicycles that will be their Christmas gifts.

She did it last year, she says. It was great. And she's brought along some powder that turns into fake snow, which the kids will like.

You step inside a large gym, where nothing proceeds quite as expected.

It's the holiday season, so way too many volunteers have shown up. The singer Ne-Yo is coming to lead a toy giveaway. There's a whole roomful of presents the children can choose from, including pre-assembled bikes — which means no bikes will need to be built.

You stand and you sit and you wait. Then the kids come. You try to help where you can — making sure they get in the right lines, handing out raffle tickets.

You see their joy at getting gifts, which is nice. You're in a place you might not ordinarily be, which is interesting. And as the children head out, you offer them snow. You put the powder in their cupped hands. You add water. The white stuff grows and begins to look real. It's even cold.

It makes them go wide-eyed. It makes them laugh. And you feel such moments of simple happiness are something.

It's chilly as you wait to get back on the bus. You get in a group hug with your fellow bus riders, who seem like old friends.

On the trip back in the dark, Pontius plays Christmas music. She serves you eggnog in Mason jars.

And she says she's sorry your help wasn't more needed today.

She promises the January ride will be more hands-on.

Come or don't, she tells you. But whatever you do, find a way to do something.

nita.lelyveld@latimes.com

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Red Hat shares up on acquisition and 3Q results

Red Hat Inc.‘s shares jumped Friday on the software company‘s solid third-quarter results and plans to acquire cloud-based software company ManageIQ.

THE SPARK: Red Hat said late Thursday that it would buy privately held ManageIQ for $ 104 million in cash.

The Raleigh, N.C., company also reported that it earned 29 cents per share for its fiscal third quarter on an adjusted basis, up a penny from the prior year and in line with analyst expectations. Its revenue for the period increased 18 percent to $ 343.6 million, which beats the $ 338 million that analysts polled by FactSet had forecast.

THE BIG PICTURE: ManageIQ’s software helps businesses deploy and manage private clouds. Red Hat said the deal will expand the reach of its public-private cloud setups for its customers. The acquisition is expected to have no material impact to Red Hat’s revenue for its fiscal year ending in February.

THE ANALYSIS: Stifel Nicolaus analyst Brad R. Reback said that the company has been able to maintain momentum even in a difficult environment and he thinks the latest deal offers an interesting longer-term angle for its business. He thinks the company is well positioned to generate at least 15 to 20 percent billings growth in the future. He reiterated a “Buy” rating and a $ 65 price target on its shares.

SHARE ACTION: Shares gained $ 2.25, or more than 4 percent, to $ 54.86 in afternoon trading. Shares have traded between $ 39.19 and $ 62.75 in the past 52 weeks.

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Alabama to End Isolation of Inmates With H.I.V.

Jamie Martin/Associated Press

The H.I.V. ward of an Alabama women's prison in 2008. The state was ordered to stop segregating inmates with the virus.

A federal judge on Friday ordered Alabama to stop isolating prisoners with H.I.V.

Alabama is one of two states, along with South Carolina, where H.I.V.-positive inmates are housed in separate prisons, away from other inmates, in an attempt to reduce medical costs and stop the spread of the virus, which causes AIDS.

Judge Myron H. Thompson of the Middle District of Alabama ruled in favor of a group of inmates who argued in a class-action lawsuit that they had been stigmatized and denied equal access to educational programs. The judge called the state’s policy “an unnecessary tool for preventing the transmission of H.I.V.” but “an effective one for humiliating and isolating prisoners living with the disease.”

After the AIDS epidemic of the 1980s, many states, including New York, quarantined H.I.V.-positive prisoners to prevent the virus from spreading through sexual contact or through blood when inmates tattooed one another. But most states ended the practice voluntarily as powerful antiretroviral drugs reduced the risk of transmission.

In Alabama, inmates are tested for H.I.V. when they enter prison. About 250 of the state’s 26,400 inmates have tested positive. They are housed in special dormitories at two prisons: one for men and one for women. No inmates have developed AIDS, the state says.

H.I.V.-positive inmates are treated differently from those with other viruses like hepatitis B and C, which are far more infectious, according to the World Health Organization. Inmates with H.I.V. are barred from eating in the cafeteria, working around food, enrolling in certain educational programs or transferring to prisons near their families.

Prisoners have been trying to overturn the policy for more than two decades. In 1995, a federal court upheld Alabama’s policy. Inmates filed the latest lawsuit last year.

“Today’s decision is historic,” said Margaret Winter, the associate director of the National Prison Project of the American Civil Liberties Union, which represented the inmates. “It spells an end to a segregation policy that has inflicted needless misery on Alabama prisoners with H.I.V. and their families.”

Brian Corbett, a spokesman for the Alabama Department of Corrections, said the state is “not prejudiced against H.I.V.-positive inmates” and has “worked hard over the years to improve their health care, living conditions and their activities.”

“We will continue our review of the court’s opinion and determine our next course of action in a timely manner,” he wrote.

During a monthlong trial in September, lawyers for the department argued that the policy improved the treatment of H.I.V.-positive inmates. Fewer doctors are needed if specialists in H.I.V. focus on 2 of the 29 state’s prisons.

The state spends an average of $22,000 per year on treating individual H.I.V.-positive inmates. The total is more than the cost of medicine for all other inmates, said Bill Lunsford, a lawyer for the Corrections Department.

South Carolina has also faced legal scrutiny. In 2010, the Justice Department notified the state that it was investigating the policy and might sue to overturn it.

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E-book restrictions leave 'buyers' with few rights

There's a crass old joke about how you can never buy beer, just rent it. Who would think that the same joke applies to book buying in the digital age?

But that's the case. Many people who'll be unwrapping iPads, Amazon Kindles or Barnes & Noble Nooks on Tuesday morning and loading them with bestsellers or classics won't have any idea how limited their rights are as their books' "owners."

In fact, they won't be owners at all. They'll be licensees. Unlike the owners of a physical tome, they won't have the unlimited right to lend an e-book, give it away, resell it or leave it to their heirs. If it's bought for their iPad, they won't be able to read it on their Kindle. And if Amazon or the other sellers don't like what they've done with it, they can take it back, without warning.

All these restrictions "raise obvious questions about what 'ownership' is," observes Dan Gillmor, an expert on digital media at Arizona State University. "The companies that license stuff digitally have made it clear that you own nothing."

Typically, e-book buyers have no idea about these complexities. How could they? The rules and limitations are embodied in "terms of service" documents that Amazon, Apple, B&N and other sellers shroud in legalese and bury deep in their websites. That tells you how little they want you to know.

The rules are based, in turn, on the 1998 Digital Millennium Copyright Act, with which Congress hoped to balance the rights of copyright holders and content users. "In the digital environment, that's always been the trickiest balance to strike," Annemarie Bridy, a specialist in intellectual property law at the University of Idaho, told me. In those terms, the DMCA looks like a failure.

Both camps have important rights to protect. Let's start with copyright owners.

In the non-digital world, copyright ends with the first sale of each copyrighted object. Under the "first sale" doctrine, once you buy a book, that physical book is yours to lend, give away, or resell. Copyright is safeguarded by the limitations of physical transfer — once the book is given or loaned, the original buyer no longer has access to it. If a library owns five copies of a book, only five borrowers can read it at the same time. Theoretically a book can be photocopied, but only at great effort and with a perceptible loss of quality.

In digital-dom, however, technology allows infinite copies to be made, with no loss of quality. Absent the usual restrictions, one could give away an e-book and still have it to read. Unrestricted transferability becomes a genuine threat to the livelihood of authors, artists, filmmakers, musicians.

So some limitation is sensible. That's usually done through digital rights management, or DRM, which encodes copy or usage limitations into the digital file. The DMCA protected DRM by outlawing efforts to circumvent it (with a few exceptions).

The question is whether the balance has tipped too far in favor of the booksellers, at the consumers' expense. The answer is yes.

For one thing, DRM has put far too much power in the hands of digital booksellers. Amazon, in particular, has shown it can't be trusted with that power. In 2009, having learned that it inadvertently had sold unauthorized e-book versions of George Orwell's "1984" and "Animal Farm" through its website, the company simply deleted those e-books from buyers' Kindles stealthily, without warning.

An uproar followed, not least because Amazon's Orwellian behavior involved those Orwellian masterpieces. Amazon settled a subsequent lawsuit by promising never to steal a book back from a Kindle without the device owner's permission.

But earlier this year, the company was revealed to have unilaterally shut down the access of Linn Jordet Nygaard, a Norwegian Kindle owner, to her library of 43 e-books, for reasons it refused to divulge. Another uproar, and Amazon backed down again, restoring Nygaard's account — again without explanation. Amazon refused my request for comment.

Another downside of e-book DRM is that most e-books are tied to the seller's reading device or apps. Buy a book from Amazon, and you can read it only on a Kindle or Amazon app. Buy it from Apple, and it can be read only on an Apple device.

This lock-in gives the booksellers power over not only consumers but publishers. In fact, it led several publishers to make a price-fixing deal with Apple that aimed to undermine Amazon's market power, but ended with their getting whacked with a big federal antitrust fine instead.

Moreover, notwithstanding the public impression that digital is forever, nothing is permanent in the digital world. In fact, digital content can be less permanent than physical books. In libraries you can find volumes that date back hundreds of years and can still be read (if carefully); but there are digital files that date back only a decade yet are completely unintelligible today.

Nowhere does Amazon, Apple or any other distributor pledge to support its digital formats in perpetuity. Quite the contrary: They typically warn that they can cancel their service at any time, without warning, in a way that could end your access to a lifetime of e-book purchases in the flash of an electron. They could also go out of business, leaving millions of dependent customers in the lurch.

Amazon keeps your purchased content for free on its own servers — the term is "in the cloud" — for downloading to your Kindles as needed. You pay once for an e-book and can use it on all the Kindles you own. I can't find any written promise by Amazon that this storage will always be free. If it announces a few years from now that henceforth there will be a monthly fee to store books purchased, say, more than 10 years ago, what rights will you have to resist? None.

There are ways to protect your e-books from grasping e-booksellers or the future. Programs available on the Web can strip the DRM code from your purchased items — for books, one possible method involves an e-library management program called Calibre. The program easily can be augmented with a DRM-stripping application so you can convert e-books sold in any proprietary format into a different format or even as plain text.

But is it legal? No one is quite sure, and that's a problem. The DMCA makes it unlawful to circumvent certain DRM protection, but doing so on an item you've bought and want to keep in a different format for your own use — not to make multiple copies for sale — may not break the law. On the other hand, distributing software that enables that is illegal under the DMCA even if the goal is legitimate, which is absurd.

Even if reformatting a file you own is legal, what if you don't own it? The hard-to-find terms of service of e-book sellers specify that you're only licensing a book, not buying it (although the Amazon order page does say you're "buying" it). "In the digital context, it's not clear that the 'first sale' has ever occurred," says Bridy.

It should be a top priority for Congress to clear out the murk. Buyers of e-books must have the explicit right to reformat their purchases and save backup copies for their own use, permanently. The sale of an e-book must be irrevocable. On the other side, it must remain strictly illegal to make multiple unauthorized copies of any copyrighted work for distribution. Lending by libraries, one digital copy at a time, should be facilitated — it tends to widen the audience for books.

The guiding principle must be that an e-book owner's rights and responsibilities parallel those of a book owner, and the same must go for authors, publishers and booksellers. "Someone once observed to me that if libraries were being invented today, publishers would try to make them illegal," Gillmor says.

Clarify these rules of e-book commerce, and the book market will reap the benefit. The power of electronic booksellers over publishers might be reduced, and consumers would know what they were buying — and would own what they bought. Leave the rules as vague as they are, and the victims will be authors, consumers and publishers.

Michael Hiltzik's column appears Sundays and Wednesdays. Reach him at mhiltzik@latimes.com, read past columns at latimes.com/hiltzik, check out facebook.com/hiltzik and follow @latimeshiltzik on Twitter.

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Hedge fund manager alleges Herbalife is 'pyramid scheme'

Herbalife Ltd. is girding for a fight against a Wall Street money man who's betting $1 billion that the company is nothing more than what he called a "pyramid scheme."

The Los Angeles maker of nutritional products rushed to defend itself Thursday against a hedge fund manager's accusation.

Hedge fund titan Bill Ackman accused Herbalife of paying its sales staff far more money to recruit new distributors than to actually sell its products.

That results in the roughly 2.6 million distributors at the bottom of the sales pyramid making little or no income, while a handful at the top hauls in millions, he said.

"This is the best-managed pyramid scheme in the history of the world," Ackman said.

The company denied the allegation and accused Ackman of trying to manipulate the stock. Herbalife shares slumped 10% on Thursday and are off 21% in the two days since Ackman announced that the company is in his sights.

"Today's presentation was a malicious attack on our business model based largely on outdated, distorted and inaccurate information," Herbalife said in a statement. "We are not an illegal pyramid scheme."

Herbalife, which bills itself as a so-called multilevel marketer, has beaten back similar accusations in the past. But the company has rarely faced a nemesis such as Ackman.

The 46-year-old billionaire has fashioned a career on high-stakes gambits in controversial companies. His fund firm, Pershing Square Capital Management, manages $12 billion.

Showdowns between companies and skeptical investors historically play out behind closed doors, especially in the normally sleepy pre-holiday period.

But in a measure of the aggressive tactics favored by an emerging breed of activist investors, Ackman launched a public blitzkrieg Thursday. He gave a flashy multimedia presentation to a packed conference room in New York that was streamed live on the Internet.

"I've never seen anything quite like it," said Timothy Ramey, an analyst at D.A. Davidson & Co. "I've never seen an investor spend 31/2 hours of time at a major venue being webcast and then make TV appearances to make his point. It's the largest orchestrated bull or bear case that I've ever seen."

The brawl has potential repercussions for both sides.

Ackman claimed to have spent one year doing intensive research on Herbalife's operations, an unusually extended period given Wall Street's thirst for immediate results.

Earlier this year, Ackman began betting that Herbalife's stock would fall sharply.

His fund is "shorting" more than 20 million shares of the company. In a short sale, an investor borrows stock and sells it immediately, hoping to later buy the shares at a reduced price and return them to their actual owner.

Ackman promised to donate all profit from his Herbalife bet to charity, and portrayed his public diatribe as intended for the public good.

"I'm very fortunate to have the means to pursue this," he said. "I am independently wealthy. When I believe in something, I can say what I want and do what is right."

For Herbalife, the fight threatens to damage its credibility among investors who have always been sensitive to claims that its business is illegitimate.

Herbalife, which was founded in 1980, sells a line of diet powders, bars, drinks and vitamins through a network of independent distributors in more than 80 countries. The company reported sales of $3.5 billion in 2011.

Its chief executive, Michael O. Johnson, was the highest paid executive in the United States last year, hauling in more than $89 million in salary, exercised stock options and other compensation, according to GMI Ratings, a corporate governance firm.

The company has fought criticism of its business model throughout its existence.

In 2008, for example, self-proclaimed fraud buster Barry Minkow shorted Herbalife's stock and then accused the company of a host of misdeeds. The company survived those accusations and Minkow ultimately went to prison on unrelated charges.

This was the second time this year that investors punished Herbalife because of questions about its business practices. Herbalife shares fell 20% in May after hedge fund operator David Einhorn asked pointed questions during an earnings call.

"We operate at the highest ethical and quality standards, and our management and our board are constantly reviewing our business practices and products," Herbalife said. "We also hire independent, outside experts to ensure our operations are in full compliance with laws and regulations."

Ackman and Herbalife engaged in a bitter and bizarre war of words, with Johnson saying the United States will "be better when Bill Ackman is gone."

Ackman interpreted the statement as a threat and said he has hired a security firm to protect him.

stuart.pfeifer@latimes.com

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Insiders steal a march in leak prone Asian markets

SINGAPORE (Reuters) – When South Korean automaker Hyundai Motor Co announced last month it had overstated the fuel efficiency levels on around one million of its cars in the United States and Canada some investors were left fuming more than others.

Some had already sold their shares before the announcement on November 2. The stock fell 4 percent on November 1 with about 2.2 million shares changing hands, the highest trading volume of the year at that point.

“This smells pretty bad,” said Robert Boxwell, director of consulting firm Opera Advisors in Kuala Lumpur who has studied insider dealing patterns.

“It would have fallen into our suspect trading category,” he added.

Boxwell spots suspect trading by looking at how much the volume diverges from the average level in the days before a market moving announcement. In the Hyundai instance, the volume was more than five standard deviations, a measure of variation, away from the daily average of 598,741 shares over the past year.

A Hyundai spokeswoman declined to comment.

Research from the Capital Markets Co-operative Research Centre (CMCRC), an academic centre in Sydney that studies financial market efficiency, found that 26 percent of price-sensitive announcements in Asia Pacific markets showed signs of leakage in the first quarter of this year, the most recent period for which data was available.

That compared with 13 percent in North American markets.

The CMCRC says it looks for suspected information leaks by examining abnormal price moves and trading volumes ahead of price-sensitive announcements.

Investors say one reason for leaks in Asia has been low enforcement rates for insider trading and breaches of disclosure rules. Enforcement in some markets is virtually non-existent.

There are also misconceptions about whether trading on non-public information is a crime.

“The idea that insider trading is wrong rather than smart is only being ingrained in the current generation of Asian players, not the older generation who are often still in the driving seat,” said Peter Douglas, founder of GFIA, a hedge fund consultancy in Singapore.

LOSS OF CONFIDENCE

Japan’s largest investment bank Nomura Holdings was embarrassed this year after regulatory investigations found it leaked information to clients ahead of three public share offerings.

Nomura has acknowledged that its employees leaked information on three share issues it underwrote in 2010. In June, it published the results of an internal investigation that found breaches of basic investment banking safeguards against leaking confidential information and announced a raft of measures to prevent recurrence.

The bank was also fined 200 million yen ($ 2.37 million) by the Tokyo Stock Exchange and 300 million yen by the Japan Securities Dealers Association.

Such leaks hurt companies’ share prices in the long run because investors put in less money if they feel they are not on a level playing field.

“It is very damaging. You may not know how much money you’ve lost but if there is not confidence that the regulators are prosecuting and enforcing the rules on this then it undermines investor confidence and liquidity,” said Jamie Allen, secretary general of the Asian Corporate Governance Association.

The issue isn’t being ignored. Many Asian markets such as Hong Kong and China have tightened their rules on insider trading over the past decade.

Indeed some investors feel that while leaks and insider dealing are unfair, regulators in the region have more serious issues they should be tackling.

“I would like to see the regulators spend more resources on investigating and prosecuting fraud against listed companies, which severely damages shareholder value,” said David Webb, a corporate governance activist in Hong Kong, arguing insider dealing as less of an impact on a company’s long-term share price.

HTC AND APPLE

A week after Hyundai’s announcement about its problems in the United States, there was an unexpected move on the Taiwan Stock Exchange.

Shares in smartphone maker HTC Corp jumped almost seven percent on Friday, November 9, hitting the daily upper trading limit. On Sunday came the surprise announcement that the company was ending its long-running patent dispute with Apple Inc , a move seen as a positive for the stock.

The Taiwan bourse announced it was investigating the trading patterns to see if there was a possible leak.

When asked for comment, HTC referred back to a November 13 statement in which the company said it had kept the Apple settlement process confidential and has strict controls on insider trading.

Michael Lin, a spokesman for the Taiwan Exchange, told Reuters on Friday that the bourse is still working with the regulator on the case.

‘ENORMOUS LOSSES’

Michael Aitken, who oversees research at the CMCRC, said many other Asian markets lack tough enough rules to force information to be released as efficiently and timely as possible, a primary reason for the prevalence of leaks.

“Poor regulation hampers enforcement efforts,” he said pointing out that few markets have the “continuous disclosure” rules used in Australia which require listed companies to release material information as soon as possible.

In Korea, when Hyundai shares started to fall, rumours began swirling that news about a problem with some of its cars was on its way, but investors say it took the company too long to disclose what exactly was happening.

“Hyundai at that time did not confirm the rumours. We suffered enormous losses because of this,” said one fund manager, who declined to be named because he was not authorised to speak to the media.

An official from Korea Exchange declined to comment on whether it was investigating this case, saying only that the exchange looks carefully into possible cases of insider trading.

Across Asia, regulators concede that many company executives and insiders still do not appreciate that leaking or trading on material, non-public information is an offence.

“People don’t even know they are engaging in insider trading, for example if their friends are talking about it on the golf course,” said Tong Daochi director-general for international affairs at the China Securities Regulatory Commission, during a regulation conference last month.

“We try to tell society, what are the criminal issues, what are the insider trading issues? For example we have held 27 press conferences to tell the public what kind of activities are involved in insider trading and to let people know that this is an active crime.” ($ 1 = 84.2600 Japanese yen) ($ 1 = 0.6147 British pounds)

(Reporting by Rachel Armstrong; additional reporting by Nishant Kumar in HONG KONG and Hyunjoo Jin in SEOUL; Editing by Emily Kaiser)

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Marilyn Monroe subway grate photo on view in NYC

NEW YORK (AP) — A famous image of Marilyn Monroe with her skirt billowing atop a New York City subway grate is on display in a picture-perfect spot: outside the Times Square subway station.

The supersized version of Sam Shaw's well-known picture is part of an exhibit. The exhibit also features eight of Shaw's other Monroe pictures, on view inside the 42nd Street-Bryant Park station on the B, D, F, M and 7 lines.

The show opened Thursday. It'll be up for a year.

Shaw shot the subway grate photo for the 1955 film "The Seven Year Itch." He took the other pictures in 1957.

The exhibit is part of the Metropolitan Transportation Authority's Arts for Transit program. Manager Lester Burg says matching a mass transit setting with a popular figure from mass culture seemed a good fit.

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Recipes for Health: Marinated Olives

Andrew Scrivani for The New York Times

Marinated olives.

These are inspired by Patricia Wells’ “Chanteduc Rainbow Olive Collection” in her wonderful book “The Provence Cookbook.” It is best to use olives that have not been pitted.

1/4 cup extra virgin olive oil

2 tablespoons red wine vinegar

5 bay leaves

2 large garlic cloves, peeled, green shoots removed, thinly sliced

Strips of rind from 1 lemon (preferably organic)

1 tablespoon fresh thyme leaves, coarsely chopped

1 teaspoon chopped fresh rosemary

1/2 teaspoon fennel seeds

2 cups imported olives (black, green or a mix) (about 3/4 pound)

 

1. Combine the olive oil, vinegar, bay leaves and garlic in a small saucepan and heat just until warm over low heat. Remove from the heat and stir in the lemon rind, thyme, rosemary and fennel seeds.

2. Place the olives in a wide mouthed jar and pour in the olive oil mixture. Shake the jar to coat the olives. Refrigerate for two hours or for up to two weeks. Shake the jar a few times a day to redistribute the seasonings.

Yield: 2 cups, serving 12

Advance preparation: These will keep for about two weeks in the refrigerator.

Nutritional information per ounce (does not include marinade): 43 calories; 4 grams fat; 0 grams saturated fat; 0 grams polyunsaturated fat; 3 grams monounsaturated fat; 0 milligrams cholesterol; 1 gram carbohydrates; 0 grams dietary fiber; 468 milligrams sodium (does not include salt to taste); 0 grams protein

 

Martha Rose Shulman is the author of “The Very Best of Recipes for Health.”

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Hedge fund manager alleges Herbalife is 'pyramid scheme'

Herbalife Ltd. is girding for a fight against a Wall Street money man who's betting $1 billion that the company is nothing more than what he called a "pyramid scheme."

The Los Angeles maker of nutritional products rushed to defend itself Thursday against a hedge fund manager's accusation.

Hedge fund titan Bill Ackman accused Herbalife of paying its sales staff far more money to recruit new distributors than to actually sell its products.

That results in the roughly 2.6 million distributors at the bottom of the sales pyramid making little or no income, while a handful at the top hauls in millions, he said.

"This is the best-managed pyramid scheme in the history of the world," Ackman said.

The company denied the allegation and accused Ackman of trying to manipulate the stock. Herbalife shares slumped 10% on Thursday and are off 21% in the two days since Ackman announced that the company is in his sights.

"Today's presentation was a malicious attack on our business model based largely on outdated, distorted and inaccurate information," Herbalife said in a statement. "We are not an illegal pyramid scheme."

Herbalife, which bills itself as a so-called multilevel marketer, has beaten back similar accusations in the past. But the company has rarely faced a nemesis such as Ackman.

The 46-year-old billionaire has fashioned a career on high-stakes gambits in controversial companies. His fund firm, Pershing Square Capital Management, manages $12 billion.

Showdowns between companies and skeptical investors historically play out behind closed doors, especially in the normally sleepy pre-holiday period.

But in a measure of the aggressive tactics favored by an emerging breed of activist investors, Ackman launched a public blitzkrieg Thursday. He gave a flashy multimedia presentation to a packed conference room in New York that was streamed live on the Internet.

"I've never seen anything quite like it," said Timothy Ramey, an analyst at D.A. Davidson & Co. "I've never seen an investor spend 31/2 hours of time at a major venue being webcast and then make TV appearances to make his point. It's the largest orchestrated bull or bear case that I've ever seen."

The brawl has potential repercussions for both sides.

Ackman claimed to have spent one year doing intensive research on Herbalife's operations, an unusually extended period given Wall Street's thirst for immediate results.

Earlier this year, Ackman began betting that Herbalife's stock would fall sharply.

His fund is "shorting" more than 20 million shares of the company. In a short sale, an investor borrows stock and sells it immediately, hoping to later buy the shares at a reduced price and return them to their actual owner.

Ackman promised to donate all profit from his Herbalife bet to charity, and portrayed his public diatribe as intended for the public good.

"I'm very fortunate to have the means to pursue this," he said. "I am independently wealthy. When I believe in something, I can say what I want and do what is right."

For Herbalife, the fight threatens to damage its credibility among investors who have always been sensitive to claims that its business is illegitimate.

Herbalife, which was founded in 1980, sells a line of diet powders, bars, drinks and vitamins through a network of independent distributors in more than 80 countries. The company reported sales of $3.5 billion in 2011.

Its chief executive, Michael O. Johnson, was the highest paid executive in the United States last year, hauling in more than $89 million in salary, exercised stock options and other compensation, according to GMI Ratings, a corporate governance firm.

The company has fought criticism of its business model throughout its existence.

In 2008, for example, self-proclaimed fraud buster Barry Minkow shorted Herbalife's stock and then accused the company of a host of misdeeds. The company survived those accusations and Minkow ultimately went to prison on unrelated charges.

This was the second time this year that investors punished Herbalife because of questions about its business practices. Herbalife shares fell 20% in May after hedge fund operator David Einhorn asked pointed questions during an earnings call.

"We operate at the highest ethical and quality standards, and our management and our board are constantly reviewing our business practices and products," Herbalife said. "We also hire independent, outside experts to ensure our operations are in full compliance with laws and regulations."

Ackman and Herbalife engaged in a bitter and bizarre war of words, with Johnson saying the United States will "be better when Bill Ackman is gone."

Ackman interpreted the statement as a threat and said he has hired a security firm to protect him.

stuart.pfeifer@latimes.com

walter.hamilton@latimes.com

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