March 31, 2023

Bits Blog: Google Seeks Permission to Publish Data on Security Requests

Google's motion with the Foreign Intelligence Surveillance Court on Tuesday is the company's latest move to control the public relations crisis that has resulted from revelations of government Internet surveillance.Jeff Chiu/Associated Press Google’s motion with the Foreign Intelligence Surveillance Court on Tuesday is the company’s latest move to control the public relations crisis that has resulted from revelations of government Internet surveillance.

Google on Tuesday filed a motion with the secret Foreign Intelligence Surveillance Court, asking permission to publish data on national security requests that were made to it and authorized by the court.

The motion is the company’s latest move to control the public relations crisis that has resulted from revelations of government Internet surveillance. It is an escalation of Google’s efforts to publish the data. Last week, it sent a letter to the director of the F.B.I. and the director of national intelligence, asking for the same thing.

By law, recipients of national security requests are not allowed to acknowledge their existence. But with the permission of the government, Facebook, Yahoo, Microsoft and Apple have in the last few days published aggregate numbers of national security and criminal requests, including those authorized by the Foreign Intelligence Surveillance Act. Google has not, because it said that would be less transparent than what it had already published. Its transparency report has since 2010 broken out requests by type, and if it agreed to the same terms the other companies did, it would not be able to publish the report that way in the future.

In the motion, Google argued that it had a First Amendment right to publish a range of the total number of requests and the number of users or accounts they cover.

Google said that its executives had responded to allegations — that it cooperated with the government in Internet surveillance — as best they could, given the government’s restraints on discussing them. But the company said that it wanted to do more for the sake of its reputation, business and users, and for the sake of public debate.

“Google’s reputation and business has been harmed by the false or misleading reports in the media, and Google’s users are concerned by the allegations,” the motion said. “Google must respond to such claims with more than generalities.”

The tech companies have been pressing to be able to publish the number of government requests largely to prove that the requests cover a tiny fraction of users. Though the other companies said they were also pushing the government for permission to publish more detailed data, they said the aggregate numbers were useful to control speculation by setting a ceiling on the number of requests.

Other tech companies affected by the government’s surveillance program, called Prism, have considered going to the secret court, an option that is still on the table, according to two people briefed on the discussions. So far, the companies have been individually negotiating with the government instead of acting in concert.

Still, even if they are allowed to publish more detailed numbers, it would leave many questions unanswered, including details of how Prism works. Also, the number of people affected by FISA requests could be much larger than the number of requests, because once the government makes a broad request, it can add individuals and additional search queries for a year.

Google’s motion also revealed that two of its top lawyers, Kent Walker and Richard Salgado, have security clearance, which FISA requires for handling classified legal orders and materials. It was filed on behalf of the company by Albert Gidari, a partner at the law firm Perkins Coie who has earned a reputation in tech and legal circles as the go-to man on surveillance law.

A version of this article appeared in print on 06/19/2013, on page B9 of the NewYork edition with the headline: Google Asks Court to Allow Data Release.

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Media Decoder: N.S.A. Leaker Is a New Kind for an Internet Age

What does a leaker look like? Sometimes, people who reveal secrets remain in the shadows, and the public is left to guess at their motivations, agendas and states of mind.

Edward Snowden, the 29-year-old man behind the recent revelations about the National Security Agency’s pursuit of phone and computer data, upended that history. He is a new kind of leaker of the wired age: an immediately visible one with a voice and the means to go direct with the public. In a era of friction-free Web communication, he disdained the shadows and stepped into view with a lengthy video interview he gave to The Guardian, which broke the story based on information he provided. He stated his motivation plainly, saying, “The public needs to decide whether these programs and policies are right or wrong.”

By identifying himself as the leaker, Mr. Snowden is helping to ensure that the debate occurs in the public common and goes beyond a closely held government investigation followed, perhaps, by prosecution. The video, which can be seen by all, means that he will be judged by all in real time.

The video presents a portrait of a man who was not a marginal loser lashing out as he flailed in his personal life: he gave up a well-paid job and his life in Hawaii with his girlfriend and is now holed up in a hotel in Hong Kong. At first blush he appears reasonable and careful, which will make him a hard target for those who seek to marginalize him or suggest that his concerns are overblown.

Of course, with visibility comes scrutiny. For the time being, the video and his interview with The Guardian are what define Mr. Snowden, but in the coming days, weeks and months, we will learn far more about his personal and professional life, and perhaps a more complicated narrative about his motivations will emerge. For the time being, we only know that he was the source of the leaks and we know his explanation of why he did what he did. Various interested parties will now set about their work, trying to make him out as a hero or a villain as it suits their agendas. And as Mr. Snowden knows better than anyone, any secrets he has will not stay that way for long.

It’s important to note that Mr. Snowden did not just dump a bunch of unredacted documents on the Web and slink back to his job. He apparently thought a great deal about where the information belonged and contacted Barton Gellman, who had a long and respected career in national security reporting at The Washington Post. According to an article by Mr. Gellman in Monday’s Post, Mr. Snowden asked for guarantees about what The Post would print, and when. After The Post said it could not provide any guarantees, according to Mr. Gellman, Mr. Snowden turned to Glenn Greenwald of The Guardian, who has covered national security and secrecy issues in a chronic and ferocious manner. (Mr. Greenwald disputes that timeline, saying he has been in contact with Mr. Snowden since February).

In spite of the uproar around WikLeaks and a new age of electronic drop boxes, there has never been a shortage of whistles; what has been in short supply is people to blow them. In this instance, the Web is not just a repository of leaked material, but a means of changing the dynamics of the debate into a two-way affair in which the public has access to the leaker. The administration, in both its public remarks and its investigations into leaks, has tried to portray those who leak as marginal people with nefarious motivations. By using the Web and speaking on his own behalf, Mr. Snowden is not allowing himself to be defined by the government.

As a whistle-blower who has come to his own defense, Mr. Snowden has engaged the public as a player in the debate. Social media, most notably Twitter, is alive with commentary about who he is and what he did. What is normally a vacuum — in which the government characterizes the leaker and those who enabled him — is now a dialogue. The debate over secrets has gone viral and as a result, is itself much less secret. In the past, few leakers would have been able to broadcast their messages to the world even before the government and the public had time to absorb the implications of what they did.

Mr. Snowden is not the first whistle-blower to draw attention to himself. Daniel Ellsberg, the central figure in the Pentagon Papers affair and one of the historical figures whom Mr. Snowden pointed to as precedents, never hid who he was. Mr. Ellsberg reasoned, correctly as it turned out, that he would be seen as someone who acted in the broader interest of the country even as he divulged its most precious secrets.

But Mr. Snowden’s visibility in an Internet age is more immediate and more ubiquitous. He is now the face of the opposition to state-sponsored information gathering. Even though he is in Hong Kong, he is everywhere.

To those sympathetic to Mr. Snowden’s viewpoint, the information he revealed seems all the more disturbing because he comes off as calm and measured. He is a real person, not a shadow, and his arguments, while very open to debate, are based in careful rhetoric.

Freedom, the right to privacy and open debate are the rare issues that surpass ideology in a very divided nation. After it was disclosed that the National Security Agency was seizing phone records, Josh Earnest, the White House deputy press secretary, said, “The president welcomes a discussion of the trade-offs between security and civil liberties.”

That debate has arrived courtesy of Mr. Snowden and will begin in earnest, perhaps not on the terms or on the schedule that the president had in mind. The age of the leaker as Web-enabled public figure has arrived.

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DealBook: New Fraud Inquiry as Trading Loss Mounts at JPMorgan

Jamie Dimon, chief of JPMorgan Chase, entered his bank's Manhattan headquarters on Friday.Jin Lee/Associated PressJamie Dimon, chief of JPMorgan Chase, entered his bank’s Manhattan headquarters on Friday.

9:07 p.m. | Updated

JPMorgan Chase disclosed on Friday that losses on its botched credit bet could climb to more than $7 billion and that the bank’s traders may have intentionally tried to obscure the full extent of the red ink on the disastrous trades.

Mounting concerns about valuing the trades led the company to announce that its earnings for the first quarter were no longer reliable and would be restated. Federal regulators, who were already examining the trades, are now looking at whether employees of the nation’s biggest bank by assets intended to defraud investors, according to people with knowledge of the matter.

The revelations left Jamie Dimon, the bank’s chief executive, scrambling for the second time within two months to contain the fallout from the trading debacle. It has already claimed one of his most trusted lieutenants, compelled Mr. Dimon to appear before Congress to account for the blunder and prompted the bank to claw back millions in compensation from three traders in London at the heart of the losses. A top bank official said that the board could also seize pay from Mr. Dimon, but did not indicate that it would do so.

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Since announcing initial losses of $2 billion in May, Mr. Dimon, once vaunted for his risk prowess after navigating the bank deftly through the financial crisis, has worked to prove that any flaws in risk management are limited to the chief investment office, a once-obscure unit with offices in London and New York. But the latest news is prompting fresh questions about whether risk controls throughout the bank are weak.

“This points to fundamental and potentially widespread risk management failure,” said Mark Williams, a professor of finance at Boston University, who also served as a Federal Reserve Bank examiner.

Much more than profits are at stake for Mr. Dimon. The mounting problems from the soured bets strengthen the hand of lawmakers in Washington who have been pushing to curtail the kind of risk-taking that led to the trading losses.

The possible deceptions came to light in a regulatory filing early Friday just before the bank reported its second-quarter earnings. While the bank posted a profit of nearly $5 billion despite the trading losses of $4.4 billion for the quarter, some analysts and regulators zeroed in on the valuation of the trades.

“If traders misrepresented a fact with the intent to defraud, they can be subject to criminal charges,” said Alan R. Bromberg, a securities law expert at Southern Methodist University.

In contrast, investors appeared to accept Mr. Dimon’s pledges that the bank had rooted out the problems and could reap record annual profits. They rallied behind the bank, sending its shares up nearly 6 percent, the best among its peers on an overall strong day for American stocks.

If the trades had been properly valued, the bank said it would have lost $1.4 billion on the position in the first quarter, bringing the total losses to $5.8 billion so far this year. In a conference call with analysts on Friday, Mr. Dimon said that the trade, under the worst market conditions, could result in another $1.7 billion in losses.

In a rare move, the bank seized millions in pay from three managers in the unit’s London office who had “direct responsibility” for the blunder. People with knowledge of the clawbacks said that pay was taken back from Achilles Macris, Javier Martin-Artajo and Bruno Iksil, the trader who gained infamy as the London Whale for his large credit trades.

A lawyer for Mr. Makris declined to comment. A lawyer for Mr. Martin-Artajo could not be reached. Raymond Silverstein, a lawyer for Mr. Iksil, said his client believed he had “done nothing wrong and that he will be exonerated in due course.” While the company did not indicate the total tally for the clawbacks, Douglas Braunstein, the bank’s chief financial officer, said the bank could claim roughly two years of total compensation, including stock options.

Ina R. Drew, the senior executive who resigned as head of the chief investment office shortly after the trading losses, volunteered to give back her pay. The giveback is a precipitous fall for Ms. Drew, once one of Mr. Dimon’s most trusted executives. Ms. Drew earned roughly $14 million last year, making her the bank’s fourth-highest-paid officer. Ms. Drew declined to comment.

JPMorgan said that an internal investigation, led by Mike Cavanagh, a former chief financial officer at the bank, unearthed questions about how traders in the bank’s chief investment office were valuing their bets. After combing through thousands of e-mails and phone call records of traders, senior executives at the bank feared that traders, in an attempt to disguise the magnitude of the losses, improperly marked their trades.

“Certain individuals may have been seeking to avoid showing the full amount of the losses in the portfolio during the first quarter,” the bank said in a statement, but didn’t indicate how many traders may be embroiled in the mismarking.

Certain tough-to-exit trades can be extremely difficult to value, according to current and former traders in the chief investment office. On some positions, “valuing a trade is like throwing a ball at a target while blindfolded,” said a former trader who requested anonymity because of the continuing investigations into the trade. The Securities and Exchange Commission, which is one of several federal regulators investigating the trading losses, is interested in the valuation of the trades, according to a person briefed on the investigation.

Separately, federal regulators from the Office of the Comptroller of the Currency and the Federal Reserve Bank of New York stationed at the bank’s Manhattan headquarters have been examining the valuation of the trades in weekly meetings with the staff at the chief investment office, according to current regulators who insisted on anonymity because the investigations have not concluded.

Mr. Cavanagh said that the executives within the unit were outmatched by the increasing complexity of the bets being made as the unit grew over the last several years. JPMorgan, Mr. Cavanagh, emphasized, is undertaking a “complete revamp of C.I.O. management.” Part of that change began Friday, when the bank announced that Irvin Goldman, who had overseen risk for the chief investment office, was resigning.

Started roughly five years ago, the unit, which grew from a sleepy operation into a profit center, was also torn by internal strife between deputies in New York and London, according to current and former traders.

Mr. Dimon emphasized that the investment office was going to focus on conservative investments. The bank has moved the majority of the soured trade to JPMorgan’s investment banking unit, where Mr. Cavanagh told analysts risk controls were strong.

Mr. Braunstein, the chief financial officer, told analysts that the decision to refile first-quarter earnings was made on Thursday, the day before the bank reported its second-quarter results. The change means that revenue for the first quarter fell by $660 million, and net income dropped by $459 million.

Mr. Dimon urged analysts Friday to focus on the bank’s overall strength.

The bank reported a $4.96 billion profit for the second quarter, down 9 percent from $5.43 billion a year earlier. Revenue also fell to $22.2 billion, down 17 percent from the same period last year.

“All of our client-driven businesses had solid performance,” Mr. Dimon said.

At one point during the earnings call, Mike Mayo, an analyst with Crédit Agricole Securities, asked whether the bank had reached a “tipping point” where it had become too unwieldy to manage.

Mr. Dimon answered with a succinct “no.”

JPMorgan, for its part, has emphasized that the trading loss is a blip in terms of the bank’s overall profitability. Mr. Dimon added that while the bank is “not proud of this moment, we are proud of this company.”

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DealBook: Red Flags Were Raised on Client Cash, MF Global Inquiry Is Told

Christine Serwinski, the former North American chief financial officer, was on vacation during much of MF Global’s final week.Andrew Harrer/Bloomberg News Christine Serwinski, the former North American chief financial officer, was on vacation during much of MF Global’s final week.

Federal investigators are conducting a final round of interviews with former MF Global employees, as they weigh whether to file criminal charges against some senior executives and grant another one immunity from prosecution.

In interviews with investigators, two former back-office employees said they had raised red flags about the firm’s possible misuse of customer money in the final week before it filed for bankruptcy, according to people briefed on the matter. The employees disclosed that a report produced early on Friday, Oct. 28, MF Global’s final day of business, showed a deficiency in customer cash accounts.

Despite the warning, MF Global continued to transfer customer money without fully disclosing the potential problem to regulators, said the people, who spoke on the condition of anonymity because they were not authorized to speak publicly. The revelations raise questions about potential communication breakdowns between the employees tracking the customer money and those transferring the funds.

The wire transfers are at the heart of a seven-month effort to recover more than $1 billion in customer money that disappeared from MF Global.

Federal investigators have homed in on Edith O’Brien, a former treasurer at MF Global official who oversaw some of the transfers. In interviews last month with former employees, investigators focused their questions on Ms. O’Brien’s actions and behavior during the week leading up to the firm’s bankruptcy filing on Oct. 31, one of the people briefed on the matter said.

Ms. O’Brien has sought immunity from prosecution. After conducting a number of interviews with Ms. O’Brien’s lawyers, federal prosecutors and the Federal Bureau of Investigation are nearing a decision about her request for immunity, the people briefed on the matter said.

The latest steps by investigators come as other new details emerge on MF Global’s collapse. On Monday, the trustee overseeing the return of customer money, James W. Giddens, is expected to issue a detailed report on the firm’s demise. The report will outline where customer money was transferred and what certain key employees were doing during that tumultuous period, according to people with knowledge of the report.

Until now, Mr. Giddens has indicated only that he had traced the missing customer money to an array of banks and some of MF Global’s trading partners. He has been reluctant to disclose specifics, fearing it might compromise negotiations to recover the money.

In the days before MF Global filed for bankruptcy, the firm misused client funds to meet its own obligations. Since then, farmers, hedge funds and other customers have been without at least a third of their money.

The trustee’s report has prompted some concern among federal investigators, who fear it could put pressure on them to wrap up their case quickly. But the report, which comes at the request of the bankruptcy judge, does not appear likely to jeopardize the investigation since much of the information is already known.

No one at MF Global, including Ms. O’Brien, has been accused of wrongdoing. And despite revelations that a potential deficiency in customer money was detected on Oct. 28, some investigators have expressed doubt about bringing a criminal case, people close to the matter have said.

Investigators have scoured tens of thousands of e-mails and documents without unearthing a smoking gun. They instead chalk up some of the wire transfers to sloppy record-keeping and mass confusion at the firm.

Regardless of whether a criminal case materializes, civil regulators are pursuing their own investigations. The Securities and Exchange Commission, for instance, is examining whether top MF Global executives failed to publicly disclose the firm’s exposure to European sovereign debt, people briefed on the matter have said. The positions, once fully detailed, prompted the firm’s investors and rating agencies to panic.

The future of the criminal investigation, being led by prosecutors in New York and Chicago as well as the F.B.I., may hinge in part on Ms. O’Brien. On Oct. 28, she oversaw a crucial transfer of $175 million to replenish an overdrawn account at JPMorgan Chase in London. The money used belonged to customers, though it is unclear whether Ms. O’Brien knew its origin at the time.

Some investigators are hesitant to grant Ms. O’Brien immunity, fearing she might be responsible for the breach of customer accounts. But they also say that with the promise of immunity, she may reveal fresh information about wrongdoing at higher rungs of the firm.

Ms. O’Brien has remained mum. When appearing before Congress in March, she declined to testify, invoking her constitutional right against self-incrimination.

Other back-office employees are cooperating with federal investigators. In recent weeks, employees in Chicago and New York have delivered so-called proffers, in which they detail their knowledge to the investigators.

Some employees have focused on the internal report that showed a deficiency in customer cash accounts amounting to hundreds of millions of dollars. The internal report, produced on Oct. 28, reflected end-of-day figures for Oct. 27, a person briefed on the matter said.

The employees who are said to have noticed the deficiency, Matthew Hughey and Mike Bolan, reported to Christine Serwinski, the firm’s North American chief financial officer. The two were unable to immediately confirm whether the deficiencies were real or the result of an accounting error, according to one of those briefed on the matter.

The new details raise concerns about whether Ms. O’Brien’s staff and Ms. Serwinski’s team were isolated from one another during the crucial period. Some say tensions have mounted between the two units in the aftermath of the collapse, with each pointing fingers at the other.

Some people close to the case have said Ms. O’Brien’s staff sent wire transfers on Oct. 28 without checking the reports showing the level of customer cash. Others have countered that Ms. O’Brien was not given access to reports on that final day of operations.

Adding to the disorder, the people say, was that Ms. Serwinski was on vacation much of that final week. One of her deputies, a person briefed on the matter said, also spent part of the week away at a conference.

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News International Knew of Broader Hacking in 2008, Lawmakers Are Told

Julian Pike, a partner at the law firm Farrer and Co., said he knew the company’s claim that the practice was limited to one “rogue reporter,” was untrue but admitted that he “had not done very much,” with the information, as he was not obliged to reveal it. He insisted that he was “not party to any cover-up.”

The company eventually admitted to wider wrongdoing early this year, and shuttered the newspaper this summer amid a cascade of revelations. But the company was told in 2008 that three other journalists at the tabloid had been involved, Mr. Pike told a committee of lawmakers gathering evidence on a scandal that continues to pervade a wide swath of British life. 

The committee will take evidence from Mr. Murdoch’s former chief lieutenant, Les Hinton, next Monday, and has said it will likely call Mr. Murdoch’s son James to give further evidence later this year. Both men face allegations, which they vehemently deny, that they were complicit in covering up phone hacking.

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At the Paper, Shock, Anger and a Retreat to a Pub (Free Beer)

But instead, according to reporters present at the speech, Ms. Brooks told the gathered crowd that she and others at News International, part of Rupert Murdoch’s media empire, “had considered every option” before deciding that the public would “never forgive us” for the revelations that had come — and more that she warned were imminent, without providing specific detail. She had worked for the company for 22 years, she said, and the decision pained her. But The News of the World would be closed down.

There were gasps, and tears, according to Jules Stenson, the head of features at the newspaper, because no one, including the most senior figures, “had an inkling” that the shutdown was coming. His overwhelming emotion, he told reporters, was that “current staff should not be tainted” by a scandal most of them were not involved in.

As the newspaper’s employees began to process the information, and calculate their severance pay, Colin Myler, the editor, gave an emotional speech celebrating the newspaper’s history. The nation would be losing “part of the fabric of British life,” he said, promising a “very special” issue for the paper’s last, due this Sunday.

According to two reporters who were present, the staff was also told that Ms. Brooks had offered her resignation twice this week, as the scandal grew, but that it had been turned down. One employee said, wryly, according to the accounts, “We accept.”

Outside of the newspaper’s glossy headquarters — a sleek glass and granite complex to which the staff had moved just months ago — a band of soon-to-be former employees gathered that afternoon to talk, smoke cigarettes and make urgent phone calls as an unseasonable wind buffeted them.

Many were reluctant to discuss events, fearing that payouts or future employment might be jeopardized. But one reporter reached by telephone and speaking on the condition of anonymity mentioned widespread anger, saying of Ms. Brooks, “I hope she is worth it for Rupert.”

Another journalist added that as the hacking scandal had developed, extending from The News of the World across the British media, into 10 Downing Street and Scotland Yard, many journalists had been polishing résumés and worrying that their careers might be in jeopardy. But none had expected such a sudden turn of events. “If you hear of any jobs going,” said the journalist, “let me know.”

As the sun set on a day that many staff members described with expletives, dozens decided on a time-honored tabloid tradition. They gathered, en masse, at a nearby pub, where The News of the World was running an open tab for the staff.

There one reporter suggested that there had been displays of triumphalism at The Guardian, the newspaper that had broken and then doggedly pursued the phone-hacking story. Several reporters at The Guardian vehemently denied the rumor and expressed solidarity with the fired News of the World employees.

So, too, did copy editors from The News of the World’s sister newspaper, The Sun, who announced they would walk out of work for this evening. And Britain’s National Union of Journalists said in a statement that the closing of The News of the World was merely “an act of damage limitation to salvage Murdoch’s reputation and that of News International — both of which are now tarnished beyond repair.”

As reporters drank, and merged with other members of the press present to cover the shutdown, some expressed more sanguine views. “Maybe we’ll get a nice lump sum,” one said. He paused and added, “Life’s too short to worry anyway.” But another journalist, part of the covering pack, suggested that Mr. Murdoch and Ms. Brooks had made a strategic error in unleashing hundreds of angry and “ruthless reporters with an axe to grind.”

As TV screens in the pub showed the latest Guardian scoop — that Andy Coulson, the former News of the World editor and Downing Street adviser — would be arrested Friday morning in connection with phone hacking, one reporter said only, “It’s not over yet.”

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