Horsemeat found in IKEA meatballs









PRAGUE/STOCKHOLM (Reuters) - Sweden's IKEA stopped nearly all sales of meatballs at its furniture store cafeterias across Europe after tests in the Czech Republic on Monday showed some contained horsemeat.

The world's No. 1 furniture retailer, known also for the signature restaurants at its huge out-of-town stores, said it was pulling all meatballs produced by its main supplier in Sweden after the tests showed horsemeat in its beef and pork meatballs.

A European scandal erupted last month when tests in Ireland revealed some beef products contained horsemeat, triggering recalls of ready-made meals in several countries and damaging confidence in Europe's vast and complex food industry.

Meatballs, a famous Swedish dish often served with mashed potatoes, gravy and lingonberry jam, have become a trademark for IKEA, which sells them hot from the in-store cafeterias and packaged off the shelf.

The vast majority of IKEA's meatballs are made by Sweden's Familjen Dafgard, which said on its website that it was investigating the situation and would receive further test results in coming days.

The withdrawals did not affect meatballs in Norway, Russia, nor some in Switzerland or Poland, which were made by other suppliers, said IKEA spokeswoman Ylva Magnusson at the company's headquarters in Helsingborg, southern Sweden.

"We are now getting to the bottom of this and making extra tests, but we have decided to stop the meatball sales for a few days, so that no one needs to worry, until we have the results," Magnusson said.

IKEA stores in the United States, Canada, Australia and Japan were unaffected as they too have other suppliers.

Besides the Czech Republic, the batch containing horsemeat had also been on sale in Britain, Portugal, Netherlands, Belgium, Slovakia, Hungary, France, Italy, Spain, Greece, Cyprus and Ireland.

Magnusson said the test results would determine the percentage of horsemeat in the specific batch of meatballs. There was no indication that any other batch had been affected.

Earlier this month, food manufacturer Findus was forced to recall thousands of packages of frozen beef lasagnes in Sweden after discovering they contained 60 to 100 percent horsemeat.

On the sidelines of a meeting in Brussels, Sweden's rural affairs minister Eskil Erlandsson called the test results awful.

"Consumers should know that what is labelled on the package should also be inside the package and nothing else," he told Reuters, adding that it may damage IKEA's reputation.

"All fraud has an impact on the reputation of a company, especially when you talk about meat or other foodstuffs."

However, he did not see a need for the European Union to enforce mandatory origin labels for processed meat.

In Italy, consumer rights group Codacons called for checks on all meat products sold by IKEA in the country.

"We are ready to launch legal action and seek compensation not only against the companies who are responsible but also those whose duty it was to protect citizens," Codacons President Carlo Rienzi said in a statement.

The Czech State Veterinary Administration had reported its findings to the EU's Rapid Alert System for Food and Feed, it said in a statement.

The inspectors took samples for DNA tests in IKEA's unit in the city of Brno from a product labelled as "beef and pork meatballs", it said.

(Additional reporting by Mia Shanley in Stockholm, Maria Pia Quaglia in Milan and Charlie Dunmore in Brussels; Writing by Anna Ringstrom; Editing by Tom Pfeiffer)



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Daytona 500 still a go despite accident that injured fans









DAYTONA BEACH, Fla. —





The Daytona 500 NASCAR race will go ahead on Sunday despite a crash on Saturday that injured more than 20 fans, questions over the safety of the famous speedway and the possibility of lawsuits.

Officials said they had repaired the fencing that was damaged after the pile-up which sent debris flying into the crowd and injuring fans on the final lap of Saturday's second-tier Nationwide race.






Halifax Health spokesman Byron Cogdell said that seven people were treated for injuries at their facility but two who had initially been listed as critical were now in a stable condition.

Another injured spectator was being treated at Florida Hospital Memorial Medical Center in Daytona Beach, but their condition was not available.

Fourteen other fans had been treated on site at the track before being released, said Daytona International Speedway president Joei Chitwood.

Chitwood said any fans in the affected area who were concerned about the safety of their seat position would be relocated.

"If fans are unhappy with...their seating location or if they have any incidents, we would relocate them. We will treat that area like we do every other of the grandstand.

"If a fan is not comfortable where they are sitting, we make every accommodation we can," he said.

NASCAR and the speedway could face millions of dollars' worth of claims from the injured, litigation that would likely center on the sturdiness of the safety fence that was supposed to keep fans from danger, according to several plaintiffs' lawyers.

"Maybe the fence should have been higher; maybe there should have been more spacing between the track and spectators," said Adam Levitt, a lawyer with Grant & Eisenhofer.

However, lawyers also said the auto-racing business would likely point to the disclaimers that it typically displays on tickets, which are designed to exempt NASCAR from any potential injury liability. They expected NASCAR would argue that fans knew what they were getting into when signing up for the race.

NEW FENCING

Both the speedway and NASCAR have said they will closely review the incident in search of any ways they could improve safety.

Chitwood said new, 22-feet-high fencing had been put in place three years ago following a review of a crash involving Colin Edwards at Talladega in 2009.

"If you look at our 55 years in the business, we have a pretty good safety track record. I think we are prepared today," said Chitwood.

However, three-times Indianapolis 500 winner Johnny Rutherford said a change might be needed.

"Maybe a double fence, one behind the other with some space in between to stop something like this," he told reporters.

"But there are a lot of things and NASCAR and Indy Car racing are looking at everything they can to make it safer.

"What happened yesterday was a terrible thing because we expect (danger) that is part of it, we have to roll the dice and move on but you don't want to involve the fans," he said.

NASCAR's senior vice-president of racing operations Steve O'Donnell said he would tell any nervous fans that organisers were confident of their safety.

"I would tell them that the fans are our first priority. Obviously we want everyone to be safe at an event," he told reporters.

"We've talked to the speedway. We are confident in what's in place at today's event. Certainly still thinking about those affected but we are confident to move forward for this race," he added.

Fans streamed into the 167,000-capacity venue on Sunday and there was little indication of concern over safety.

"I feel safe. I think anywhere you go you run the risk of being injured but NASCAR does everything they can to protect the fans. They treat the fans like royalty here, it is amazing," said Vinny Nigro of New York City.

Another fan, Brad Stefka from Springfield, Missouri, said that while not particularly worried he would avoid the seating closest to the track.

"I just won't get down low. I would imagine that everyone who comes knows there is some element of danger if the cars are going that fast, if there is going to be a serious impact," he said.



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Analysis: The near impossible battle against hackers everywhere


SAN FRANCISCO (Reuters) - Dire warnings from Washington about a "cyber Pearl Harbor" envision a single surprise strike from a formidable enemy that could destroy power plants nationwide, disable the financial system or cripple the U.S. government.


But those on the front lines say it isn't all about protecting U.S. government and corporate networks from a single sudden attack. They report fending off many intrusions at once from perhaps dozens of countries, plus well-funded electronic guerrillas and skilled criminals.


Security officers and their consultants say they are overwhelmed. The attacks are not only from China, which Washington has long accused of spying on U.S. companies, many emanate from Russia, Eastern Europe, the Middle East, and Western countries. Perpetrators range from elite military units to organized criminal rings to activist teenagers.


"They outspend us and they outman us in almost every way," said Dell Inc's chief security officer, John McClurg. "I don't recall, in my adult life, a more challenging time."


The big fear is that one day a major company or government agency will face a severe and very costly disruption to their business when hackers steal or damage critical data, sabotage infrastructure or destroy consumers' confidence in the safety of their information.


Elite security firm Mandiant Corp on Monday published a 74-page report that accused a unit of the Chinese army of stealing data from more than 100 companies. While China immediately denied the allegations, Mandiant and other security experts say the hacker group is just one of more than 20 with origins in China.


Chinese hackers tend to take aim at the largest corporations and most innovative technology companies, using trick emails that appear to come from trusted colleagues but bear attachments tainted with viruses, spyware and other malicious software, according to Western cyber investigators.


Eastern European criminal rings, meanwhile, use "drive-by downloads" to corrupt popular websites, such as NBC.com last week, to infect visitors. Though the malicious programs vary, they often include software for recording keystrokes as computer users enter financial account passwords.


Others getting into the game include activists in the style of the loosely associated group known as Anonymous, who favor denial-of-service attacks that temporarily block websites from view and automated searches for common vulnerabilities that give them a way in to access to corporate information.


An increasing number of countries are sponsoring cyber weapons and electronic spying programs, law enforcement officials said. The reported involvement of the United States in the production of electronic worms including Stuxnet, which hurt Iran's uranium enrichment program, is viewed as among the most successful.


Iran has also been blamed for a series of unusually effective denial-of-service attacks against major U.S. banks in the past six months that blocked their online banking sites. Iran is suspected of penetrating at least one U.S. oil company, two people familiar with the ongoing investigation told Reuters.


"There is a battle looming in any direction you look," said Jeff Moss, the chief information security officer of ICANN, a group that manages some of the Internet's key infrastructure.


"Everybody's personal objectives go by the wayside when there is just fire after fire," said Moss, who also advises the U.S. Department of Homeland Security.


HUNDREDS OF CASES UNREPORTED


Industry veterans say the growth in the number of hackers, the software tools available to them, and the thriving economic underground serving them have made any computer network connected to the Internet impossible to defend flawlessly.


"Your average operational security engineer feels somewhat under siege," said Bruce Murphy, a Deloitte & Touche LLP principal who studies the security workforce. "It feels like Sisyphus rolling a rock up the hill, and the hill keeps getting steeper."


In the same month that President Barack Obama decried enemies "seeking the ability to sabotage our power grids, our financial institutions, our air traffic control systems," cyber attacks on some prominent U.S. companies were reported.


Three leading U.S. newspapers, Apple Inc, Facebook Inc, Twitter and Microsoft Corp all admitted in February they had been hacked. The malicious software inserted on employee computers at the technology companies has been detected at hundreds of other firms that have chosen to keep silent about the incidents, two people familiar with the case told Reuters.


"I don't remember a time when so many companies have been so visibly 'owned' and were so ill-equipped," said Adam O'Donnell, an executive at security firm Sourcefire Inc, using the hacker slang for unauthorized control.


Far from being hyped, cyber intrusions remain so under-disclosed — for fear leaks about the attacks will spook investors — that the new head of the FBI's cyber crime effort, Executive Assistant Director Richard McFeely, said the secrecy has become a major challenge.


"Our biggest issue right now is getting the private sector to a comfort level where they can report anomalies, malware, incidences within their networks," McFeely said. "It has been very difficult with a lot of major companies to get them to cooperate fully."


McFeely said the FBI plans to open a repository of malicious software to encourage information sharing among companies in the same industry. Obama also recently issued an executive order on cyber security that encourages cooperation.


The former head of the National Security Agency, Michael Hayden, supports the use of trade and diplomatic channels to pressure hacking nations, as called for under a new White House strategy that was announced on Wednesday.


"The Chinese, with some legitimacy, will say 'You spy on us.' And as former director of the NSA I'll say, 'Yeah, and we're better at it than you are," said Hayden, now a principal at security consultant Chertoff Group.


He said what worries him the most is Chinese presence on networks that have no espionage value, such as systems that run infrastructure like energy and water plants. "There's no intellectual property to be pilfered there, no trade secrets, no negotiating positions. So that makes you frightened because it seems to be attack preparation," Hayden said.


Amid the rising angst, many of the top professionals in the field will convene in San Francisco on Monday for the best-known U.S. security industry conference, named after host company and EMC Corp unit RSA.


Several experts said they were convinced that companies are spending money on the wrong stuff, such as antivirus subscriptions that cannot recognize new or targeted attacks.


RSA Executive Chairman Art Coviello and Francis deSouza, head of products at top vendor Symantec Corp, both said they will give keynote speeches calling for a focus on more sophisticated analytical tools that look for unusual behavior on the network — which sounds expensive.


Others urge a more basic approach of limiting users' computer privileges, rapidly installing software updates, and allowing only trusted programs to function.


Some security companies are starting over with new designs, such as forcing all of their customers' programs to run on walled-off virtual machines.


With such divergent views, so much money at stake, and so many problems, there are perhaps just two areas of agreement.


Most people in the industry and government believe things will get worse. Coviello, for his part, predicted that a first-of-its kind - but relatively simple - virus that deleted all data on tens of thousands of PCs at Saudi Arabia's national oil company last year is a harbinger of what will come.


And most say that the increased mainstream attention on cyber security, even if it fixes uncomfortably on the industry's failings and tenacious adversaries, will help drive a desperately needed debate about what do to internationally and at home.


(Reporting by Joseph Menn in San Francisco; Additional reporting by Jim Finkle in Boston and Deborah Charles in Washington; Editing by Tiffany Wu and Jackie Frank)



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Safety on everyone's mind before Daytona 500


DAYTONA BEACH, Fla. (AP) — Raymond Gober parked his motorcycle outside Daytona International Speedway, climbed off and briefly considered bringing his helmet into the track.


"I was about to wear it in, but I knew everyone would be laughing at me," said Gober, a pastor from outside Atlanta.


Maybe not.


Safety was on everyone's mind before the Daytona 500 on Sunday, a day after a horrific wreck in a second-tier NASCAR series race hurled chunks of debris, including a heavy tire, into the stands and injured nearly 30 people.


With small spots of blood still soaked into the concrete seating area, the accident raised questions about the safety of fans at race tracks. Should fences be higher and sturdier? Should grandstands be farther from the track?


NASCAR has long been a big draw because of its thrilling speeds, tight-knit racing, frantic finishes and the ability to get so close to the action.


That proximity comes with some risk.


And after Saturday's 12-car melee on the final lap of the Nationwide Series opener, some questioned whether that risk outweighed the reward.


"These are the best seats in the house, but they're also dangerous," Gober said.


Gober was one of thousands of fans who returned to Daytona less than 24 hours after Kyle Larson's car flew into the fence, crumbled into pieces and sprayed parts at spectators.


"You don't have time to react, but I just remember thinking, 'This is gonna hurt,'" said Steve Bradford, of Dade City. "We were showered with debris."


Gober picked up a bolt that landed next to his left foot and plans to take it home as a souvenir from a crash that could have considerably worse.


He and Bradford have been coming to races at Daytona for years, always seeking out scalped tickets so they can get ultra-close to the cars zooming by at 200 mph.


Now, though?


"Needless to say, we won't be here next year," Bradford said — meaning the seats, not the race.


He pointed at the upper level.


"Next year, we'll be up there," he said.


Not everyone felt the same way.


John and Andrea Crawford, of Streetsboro, Ohio, love sitting a few rows up. They were there Saturday and back again Sunday, just like so many in that seating section.


The area had rubber marks on seats hit by the tire. Several fans pointed out a chair bent backward, the spot one man was sitting when he got pummeled by the 60-pound tire and wheel.


"I'm not nervous," Andrea Crawford said. "It doesn't happen that much."


When Rick Barasso arrived at his seats, he noticed a few reporters and some tire marks. He asked what was going on and then couldn't stop smiling as he waved his friends over and shared details with them.


"These should be good seats," he said. "I mean, what are the chances?"


Maybe small, but there's little doubt the latest fallout could prompt NASCAR and track officials to consider changes — at Daytona and elsewhere.


Daytona has plans to remodel the grandstands. Track President Joie Chitwood said Saturday's wreck could prompt sturdier fences or stands farther from the action.


"It's tough to connect the two right now in terms of a potential redevelopment and what occurred," Chitwood said. "We were prepared yesterday, had emergency medical respond. As we learn from this, you bet: If there are things that we can incorporate into the future, whether it's the current property now or any other redevelopment, we will.


"The key is sitting down with NASCAR, finding out the things that happened and how we deal with them."


Daytona reexamined its fencing and ended up replacing the entire thing following Carl Edwards' scary crash at Talladega Superspeedway in Alabama in 2009. Edwards' car sailed into the fence and spewed debris into the stands.


"We've made improvements since then," Chitwood said. "I think that's the key: that we learn from this and figure out what else we need to do."


Three-time Indianapolis 500 winner Johnny Rutherford said Sunday that things should be done across auto racing. It was just 16 months ago that IndyCar driver Dan Wheldon was killed when his car crashed into a fence at Las Vegas.


"Maybe we need a double fence, one behind the other, with maybe a space in between to do something to stop this," Rutherford said. "There's a lot of things. I'm sure NASCAR and the IndyCar series are looking at everything to make it safer. What happened yesterday was a terrible thing.


"The drivers, we accept that. That's part of the game. We have to roll the dice and move on. But you don't want to involve the fans."


Chitwood said any fans who felt uncomfortable with their up-close seating for the Daytona 500 could exchange their tickets for spots elsewhere.


"If fans are unhappy with their seating location or if they have any incidents, we would relocate them," Chitwood said. "So we'll treat that area like we do every other area of the grandstand. If a fan is not comfortable where they're sitting, we make every accommodation we can."


Few fans seemed willing to relocate.


"Real NASCAR fans ain't scared," said Zeb Daniels, who was attending his fifth Daytona 500 with his daughter. "If we see anything coming to the fence, we'll hit the floor and pray."


So why take a chance?


"We come for the thrill, the excitement," Daniels said. "We can feel the heat, the tire rubber in our eyes."


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FDA approves new targeted breast cancer drug


WASHINGTON (AP) — The Food and Drug Administration has approved a first-of-a-kind breast cancer medication that targets tumor cells while sparing healthy ones.


The drug Kadcyla from Roche combines the established drug Herceptin with a powerful chemotherapy drug and a third chemical linking the medicines together. The chemical keeps the cocktail intact until it binds to a cancer cell, delivering a potent dose of anti-tumor poison.


Cancer researchers say the drug is an important step forward because it delivers more medication while reducing the unpleasant side effects of chemotherapy.


"This antibody goes seeking out the tumor cells, gets internalized and then explodes them from within. So it's very kind and gentle on the patients — there's no hair loss, no nausea, no vomiting," said Dr. Melody Cobleigh of Rush University Medical Center. "It's a revolutionary way of treating cancer."


Cobleigh helped conduct the key studies of the drug at the Chicago facility.


The FDA approved the new treatment for about 20 percent of breast cancer patients with a form of the disease that is typically more aggressive and less responsive to hormone therapy. These patients have tumors that overproduce a protein known as HER-2. Breast cancer is the second most deadly form of cancer in U.S. women, and is expected to kill more than 39,000 Americans this year, according to the National Cancer Institute.


The approval will help Roche's Genentech unit build on the blockbuster success of Herceptin, which has long dominated the breast cancer marketplace. The drug had sales of roughly $6 billion last year.


Genentech said Friday that Kadcyla will cost $9,800 per month, compared to $4,500 per month for regular Herceptin. The company estimates a full course of Kadcyla, about nine months of medicine, will cost $94,000.


FDA scientists said they approved the drug based on company studies showing Kadcyla delayed the progression of breast cancer by several months. Researchers reported last year that patients treated with the drug lived 9.6 months before death or the spread of their disease, compared with a little more than six months for patients treated with two other standard drugs, Tykerb and Xeloda.


Overall, patients taking Kadcyla lived about 2.6 years, compared with 2 years for patients taking the other drugs.


FDA specifically approved the drug for patients with advanced breast cancer who have already been treated with Herceptin and taxane, a widely used chemotherapy drug. Doctors are not required to follow FDA prescribing guidelines, and cancer researchers say the drug could have great potential in patients with earlier forms of breast cancer


Kadcyla will carry a boxed warning, the most severe type, alerting doctors and patients that the drug can cause liver toxicity, heart problems and potentially death. The drug can also cause severe birth defects and should not be used by pregnant women.


Kadcyla was developed by South San Francisco-based Genentech using drug-binding technology licensed from Waltham, Mass.-based ImmunoGen. The company developed the chemical that keeps the drug cocktail together and is scheduled to receive a $10.5 million payment from Genentech on the FDA decision. The company will also receive additional royalties on the drug's sales.


Shares of ImmunoGen Inc. rose 2 cents to $14.32 in afternoon trading. The stock has ttraded in a 52-wek range of $10.85 to $18.10.


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Oscars have clear favorites, wild-card MacFarlane


LOS ANGELES (AP) — Some firsts and other rarities are possible at Sunday night's Academy Awards. But if the Oscars could be just a little less predictable, the show might really be one for the record books.


Ben Affleck's "Argo" looks like it will uniquely claim best picture without a directing nomination, while "Lincoln" filmmaker Steven Spielberg and star Daniel Day-Lewis are favored to join exclusive lists of three-time Oscar winners.


If some longshots came in, the night could produce two more three-time acting winners — Sally Field from "Lincoln" and Robert De Niro for "Silver Linings Playbook."


We could also have the oldest or youngest acting winner ever — 86-year-old "Amour" star Emmanuelle Riva and 9-year-old Quvenzhane (Kwa-VEHN-ja-nay) Wallis of "Beasts of the Southern Wild."


The ABC television broadcast itself could set some fresh highs or lows. Oscar overseers keep talking about pacing and trimming fat from a ceremony that's dragged on interminably, approaching four and a half hours one year. Can they keep it tight and lively enough that viewers don't think about gouging out their eyes around the three-hour mark?


And what about host Seth MacFarlane? He's a classy, low-key guy in person, with an old-fashioned Sinatra-style singing voice that he'll no doubt put to use in a show that's shaping up as a music-heavy, Broadway-style celebration of cinema.


Yet MacFarlane's career is built on pushing the envelope — or crumpling it and tossing it in the trash — as he's tested the boundaries of good taste with such brazen shows as his animated series "Family Guy" and last summer's obscenity-laden blockbuster "Ted," which earned him a songwriting Oscar nomination.


The result could be a fun night for younger, hipper TV audiences that Oscar organizers are courting but a crude awakening for traditionalists who like their Academy Awards to lean more toward the sacred than the profane. Or it could be that MacFarlane makes the most of the thankless task of shepherding the Oscars, striking a nice balance between respecting Hollywood and poking fun at it.


"I think a little bit of that injected into the mix will go a long way, but I do also have to be mindful, in this instance, of not losing the audience that's there every year," MacFarlane said. "It's a different audience from my own, but I do have to be respectful that they will be watching."


So maybe it's an Oscar show that's shaken, but not stirred up too much. That might suit one of the evening's special honorees, British super-spy James Bond, whose adventures will be the subject of a tribute to mark the 50th anniversary of his first big-screen outing in "Dr. No." Adele will perform her Oscar-nominated title tune to last year's Bond tale "Skyfall," while the show features Shirley Bassey, who sang the Bond theme songs for "Goldfinger," ''Diamonds Are Forever" and "Moonraker."


The show presents a salute to movie musicals of the last decade, with "Chicago" Oscar winner Catherine Zeta-Jones and "Dreamgirls" winner Jennifer Hudson joining "Les Miserables" cast members that include best-actor nominee Hugh Jackman, supporting-actress front-runner Anne Hathaway, Russell Crowe, Helena Bonham Carter and Amanda Seyfried.


Oscar producers Craig Zadan and Neil Meron have lined up a bubbly mix of young and old Hollywood as presenters, performers and special guests — from Barbra Streisand, Michael Douglas and Jane Fonda to "Harry Potter" star Daniel Radcliffe, "Twilight" star Kristen Stewart, and Robert Downey Jr. and his superhero colleagues from "The Avengers."


Along with front-runners Day-Lewis as best actor for "Lincoln" and Hathaway as supporting actress for "Les Miserables," the other favorites are Jennifer Lawrence as best actress for "Silver Linings Playbook" and Tommy Lee Jones as supporting actor for "Lincoln."


Day-Lewis would be only the sixth performer to earn three or more Oscars and the first to win three times as best actor. "Lincoln" also could make Spielberg just the fourth filmmaker to win three or more directing trophies.


Affleck's thriller "Argo" is in line for best picture after winning practically every top prize at earlier honors. Hollywood was shocked that Affleck was snubbed for a directing nomination, possibly earning the film some sympathy votes, particularly from actors, who love it when one of their own succeeds behind the camera.


The story of how Hollywood, Canada and the CIA teamed up to rescue six Americans during the Iranian hostage crisis, "Argo" would become just the fourth film in 85 years to claim the top prize without a best-directing nomination and the first since 1989's "Driving Miss Daisy."


The best-picture prize typically ends the Oscar show, but this time, MacFarlane and Kristin Chenoweth will perform a closing number on the Dolby Theatre stage that producers Zadan and Meron called a "'can't miss' moment."


Keeping the wraps on whatever surprises they have in store has been a chore for them and MacFarlane.


"It's been difficult. The press, as you know, is very nosy and sneaky. They're always sniffing around trying to get any advance notice," MacFarlane said. "It's like (expletive) Christmas. Wait till Christmas morning. Don't spoil the surprise."


___


AP Entertainment Writer Sandy Cohen contributed to this report.


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Promise, peril seen for crowd-funding investors









Crowd funding is widely seen as a revolutionary idea.


A 2012 federal law known as the JOBS Act opens the door to allowing small, privately owned businesses to market ownership stakes in their ventures to people over the Internet.


Companies will be able to sell up to $1 million in equity a year to ordinary investors without having to register the offering with the Securities and Exchange Commission or state regulators.





Before the average person can use crowd funding to stake a claim in a startup, the SEC still must draft rules that the Obama administration hopes will result in U.S. businesses growing and adding jobs. At the same time, the securities cop needs to include safeguards that protect less sophisticated individual investors drawn to inherently risky startups.


That's why equity crowd funding under JOBS, or Jumpstart our Business Startups, has some longtime regulators and securities lawyers squirming.


"It can be an invitation for fraudsters to steal money," Matthew Brown, a Katten Muchin Rosenman lawyer, said last month at a CFA Society of Chicago event at 1871, a center for digital startups in Chicago.


But Brown also noted that equity crowd funding also democratizes small-business financing, a process that historically has given access mostly to wealthier — or, as they're known in high-finance circles, "accredited" — investors.


"The world has changed dramatically, and who's to say who is smarter than anyone else?" Brown added.


Many existing crowd-funding platforms such as Kickstarter don't sell equity stakes in businesses to average investors. Rather, they give consumers the chance to donate money to an enterprise or to get an early or discounted crack at a new product. Since Kickstarter's launch in April 2009, more than $450 million has been pledged by more than 3 million people funding more than 35,000 projects, the New York-based company's website says.


Their acceptance suggests that consumers are willing to engage with companies on a deeper level. As such, enabling unaccredited consumers to invest in companies in small increments online has promise and could become part of the fundraising "ecosystem," says one Chicago entrepreneur.


Abe's Market, a Chicago-based e-commerce site selling natural and organic products from more than 1,000 suppliers, said it would consider crowd funding under the JOBS Act, saying it and its vendors have "die-hard fans" and "a core group of customers" who might like to invest in their vision.


Last month, Abe's raised $5 million from Carmel Ventures, Index Ventures, Beringea and Accel Partners, a Groupon backer. New backers include OurCrowd, a crowd-funding site for accredited investors.


"If you can get passionate people to invest in your business, you're not just gaining investors, you're gaining evangelists," Abe's Chief Executive Richard Demb said. "The challenge for any consumer brand is: How do you find not just customers, but the right customers who are going to tell their friends?"


But there would also be potential headaches for companies raising equity financing through crowd funding, he said.


"You have to make sure that expectations would be set fairly, that no one is putting their life savings into the investment, and that they don't also come back and become a challenge to manage as the business grows," Demb said. "You don't want someone who invested $250 to come back and say, 'I don't think we should expand to the West Coast.'"


Safeguards for average investors exist in the JOBS Act. They include capping nonaccredited individuals' crowd-funding investments at $2,000, or 5 percent of annual income or net worth of less than $100,000, whichever is greater.


Snapclass, launched a few weeks ago at 1871, provides software enabling businesses to provide training online. Co-founder Scott Mandel, who has financed the company himself, doesn't expect to take advantage of equity crowd funding in the future and instead would seek, say, venture capital funding.


"Not all checks are the same," said Mandel, previously a trader and professional poker player. "I'd want someone who could add more than just the cash, such as connections and experience and help with things that I'm not an expert in."


One of 1871's fastest-growing startups is MarkITx. It recently raised $1.2 million from wealthy individuals in its first fundraising round, has seven employees and is looking to add sales jobs. It's an online exchange for businesses wanting to buy and sell used information technology equipment, from iPads to Oracle servers.


"For us, it wouldn't be the sole way to raise money, but it definitely is a viable vehicle to look at raising money," MarkITx partner Marc Brooks said of equity crowd funding under the JOBS Act.





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Charges filed in slaying of Clemente High School student









Authorities filed charges against a 34-year-old man in connection with the shooting death of an 18-year-old Clemente High School student killed on the West Side last week.


Larry Luellen Jr., 34, was charged with first degree murder in the death of Frances Colon. Luellen was ordered held with no bond in court today.


Luellen lives in the 3900 block of West Division Street in West Humboldt Park, around the corner from where Colon was shot. Police don't believe she was the target.





Colon is the third student at Roberto Clemente to be killed this school year, according to the school's principal Marcey Sorensen.


Rey Dorantes, 14, of the 2400 block of West Augusta Boulevard, was shot and killed on Jan. 11. His death came about a month after another Clemente student, 16-year-old Jeffrey Stewart, of the 5200 block of West Race Avenue, was shot and killed on Dec. 9.


Colon was a senior who was preparing to attend college. Hours before the shooting, she had watched President Barack Obama speak at Hyde Park Academy on the South Side about gun violence, according to her father.


Naomi Nix contributed.


pnickeas@tribune.com
Twitter: @peternickeas





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Einhorn scores legal victory versus Apple in cash scuffle


NEW YORK (Reuters) - A U.S. judge handed outspoken hedge fund manager David Einhorn a victory in his battle with Apple Inc on Friday, blocking the iPhone maker from moving forward with a shareholder vote on a controversial proposal to limit the company's ability to issue preferred stock.


U.S. District Judge Richard Sullivan in Manhattan granted a motion by Einhorn's Greenlight Capital for a preliminary injunction stopping a vote on that proposal, scheduled for the company's February 27 stockholders' meeting.


The decision could hand Einhorn more leverage as he pursues his pitch for Apple to issue what he has called the "iPref": preferred stock with a perpetual dividend that he contends would reward investors and help boost the company's share price.


Greenlight sued Apple on February 7 as part of a broader pitch to unlock more of its $137 billion in cash. The hedge fund manager has lobbied Apple to issue preferred stock with a perpetual 4 percent dividend, and on Thursday made a direct appeal to shareholders on a teleconference.


Apple Chief Executive Tim Cook last week dismissed the lawsuit as a "silly sideshow."


The lawsuit itself challenged a measure called Proposal No. 2 that Apple put forward, which would eliminate its power to issue preferred shares without a shareholder vote.


At issue is Apple's "bundling" of that measure with two other unrelated matters into a single proxy proposal.


Greenlight said it supported two of the proposed amendments, but not the one on preferred shares.


In his ruling, Sullivan said Greenlight and another investor who also sued Apple "are likely to succeed on the merits and face irreparable harm if the vote on Proposal No. 2 is permitted to proceed."


"We are disappointed with the court's ruling. Proposal No. 2 is part of our efforts to further enhance corporate governance and serve our shareholders' best interests," Apple spokesman Steve Dowling said. "Unfortunately, due to today's decision, shareholders will not be able to vote on Proposal No. 2 at our annual meeting next week."


A spokesman for Greenlight called the ruling a "significant win for all Apple shareholders and for good corporate governance."


But not all shareholders were happy. California pension fund Calpers, a major Apple investor and public supporter of Apple's proposal, said implementation of "majority voting and shareholder approval for the issuance of new stock - preferred or otherwise - is worth waiting for."


"We encourage Apple to reintroduce these measures as soon as is practical so that all investors can be heard," Anne Simpson, Calpers' director of global governance, said in a statement.


BUNDLES


The ruling could be a warning for other companies when issuing proxy proposals, said James Cox, a professor at Duke University School of Law.


"It's going to make managers reluctant to bundle things together, because you're never going to know when you send them out if there's an Einhorn out there," he said.


The lawsuit was centered on a narrow issue of whether Apple violated U.S. Securities and Exchange Commission rules by "bundling" the preferred shares item with two other unrelated matters into one proxy proposal.


Greenlight's lawyers contended the SEC rules were intended to protect shareholders from being forced to vote for a proxy proposal involving materially different issues that the investors might not entirely support.


Apple had argued Proposal No. 2, which only dealt with amendments to its charter, constitute a single matter and wasn't bundled. Sullivan called the company's arguments "unavailing."


"Given the language and purpose of the rules, it is plain to the Court that Proposal No. 2 impermissibly bundles 'separate matters' for shareholder consideration," Sullivan wrote.


Judge Sullivan also found that Greenlight would be irreparably harmed without the injunction, since it would be forced to vote against its own interests. Denying Greenlight's motion would prevent it and other investors from exercising their rights to a fair vote, Sullivan said.


Sullivan separately declined to block a vote from going forward on a separate proxy proposal, Proposal No. 4, which sought an advisory "say on pay" vote on Apple executives' compensation.


The proposal had been challenged by investor Brian Gralnick of Pennsylvania, who contends Apple did not disclose enough details about how it made its compensation decisions.


Sullivan rejected that argument, saying Apple's disclosures were "plainly sufficient under SEC rules."


Arnold Gershon, a lawyer for Gralnick at Barrack, Rodos & Bacine, said he was "very pleased" with Sullivan's decision to the extent it enjoined the Proposal No. 2 vote, though said he would have to decide what to do next with regard to the say-on-pay proposal.


Sullivan directed the parties to submit a joint letter by March 1 outlining the next contemplated steps in this case.


Apple shares closed up 1.1 percent at $450.81 on Friday.


The case is Greenlight Capital LP, et al., v. Apple Inc., U.S. District Court, Southern District of New York, 13-900.


(Reporting by Nate Raymond in New York; Additional reporting by Poornima Gupta in San Francisco; Editing by Martha Graybow, Gary Hill, Leslie Adler, Carol Bishopric and Lisa Shumaker)



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Danica brings new eyes to NASCAR and Daytona 500


DAYTONA BEACH, Fla. (AP) — The big boys brought their little girls to see NASCAR's shining star.


Jeff Gordon, Carl Edwards and Jimmie Johnson all took their daughters to meet Danica Patrick this week at Daytona International Speedway.


It was the ultimate backstage pass.


Patrick dropped to one knee, wrapped her right arm around Ella Gordon's waist and posed for pictures as the 5-year-old flashed an endless smile in Victory Lane last week. Every day since, Patrick's crew has handed out dozens and dozens of lugnuts to little girls clamoring for souvenirs. Annie Edwards wore GoDaddy green shoes for the special occasion. Evie Johnson recognizes only two cars, her Dad said — his and the green one.


"Carl was saying it's good that she sees me in real life and in person because 'To her, you are like some mythical creature that doesn't exist,' " Patrick said. "Then after qualifying, Jimmie Johnson brought his little girl over. That's three pretty big drivers who have little girls that wanted to meet me."


Danicamania is in full bloom at Daytona — and with a brand new audience.


The first woman in history to earn the top starting spot in a race at NASCAR's elite Sprint Cup Series, Patrick will bring new eyeballs to Sunday's season-opening Daytona 500. She'll lure in casual sports fans, women who don't know a muffler from a manifold, and little girls in awe of the glamorous driver and her fast green car.


It's an ambassador role Patrick has played since her 2005 debut at the Indianapolis 500, where she became the first woman to lead laps in the biggest race in the world. But it's so much more now.


"You can only lead by example and I don't necessarily want my example to step outside the box and be a girl in a guy's world. That's not what I am trying to say," Patrick said. "But if you have a talent for something, do not be afraid to follow through with it and not feel different. Do not feel like you are less qualified or less competent to be able to do the job because you are different. Ignore that and let it be about what your potential is."


And right now, she believes her potential is to win "The Great American Race."


Patrick starts first on Sunday, next to four-time champion Gordon, and after running 32 laps in Friday's practice and mixing it up with NASCAR's biggest stars, she was more convinced than ever that she can be a player in the race.


"Can I win? Yeah. Absolutely," Patrick said. "I feel comfortable in this kind of race situation. I feel comfortable in the draft. I feel comfortable that the speeds are not a problem. I know I am inexperienced. I know I am rookie out there. I will do the best job I can to win. I do believe I have a chance to win. I do believe experience would help, but that doesn't mean I don't have a chance to win."


Crew chief Tony Gibson was even more convinced he's got a winner for Sunday. He was part of Derrike Cope's improbable 1990 victory, when Cope inherited the win when the late Dale Earnhardt blew a tire on the final lap.


" She has got the talent," Gibson said. "She's already proven in the Nationwide Series, from what I've seen on the speedway stuff, she definitely gets the respect. People know she's fast. She can draft. She knows how the air works. She gets a lot of that from IndyCar. So I have 100 percent confidence she can win the Daytona 500.


"I remember Derrike Cope, nobody gave him a chance, either, but I saw him in Victory Lane. I know it can be done."


But the Daytona 500 is a pressure-packed race unlike anything except the Indy 500. Some of the best drivers never win it — it took seven-time champion Earnhardt 20 tries to finally get his lone win — and Tony Stewart, Patrick's teammate and car owner, goes into Sunday's race seeking his first victory in 15 tries.


He's been quiet all week, except, of course, for the nine-car accident he started in an exhibition race last weekend. He lamented afterward, "That is why I haven't won a Daytona 500 yet. I'm not quite sure exactly which move to make."


Don't be fooled, though, by the three-time NASCAR champion. Stewart might just like being out of the spotlight as he heads into one of the few races missing from his resume, and being the favorite for the 500 has never worked out for him before.


He wrapped up his practice with one final run Friday to test his race engine and wound up on top of the speed chart. It was Stewart's intention to sit out Saturday's final day of practice.


"I'm excited we've made it through the whole week without a scratch on the car," he said. "We are as ready as you can get for the 500. I feel like we've got a car capable of winning the race. It's just a matter of whether the driver does a good job with the steering wheel."


The title of favorite this year goes to Kevin Harvick, who has two wins in two races so far at Speedweeks. The driver has dominated in his Richard Childress Racing Chevrolet, led 63 of a possible 135 laps and didn't even bother to take the cover off his car in Friday's two practice sessions.


Harvick, the 2007 race winner, has come into the year with both focus and some inner peace after a pair of life-changing moments. His first child, son Keelan, was born after last July's race at Daytona. Then, in November, Harvick made the difficult decision to leave RCR after his 13th season with the organization that brought him into NASCAR and gave him his Cup ride the week after Earnhardt was killed in the 2001 Daytona 500.


He'll drive for Stewart next season at Stewart-Haas Racing, but is determined to make this last year with RCR count.


"Everybody is just working toward the same goal, that's winning the races," Harvick said. "We have to be professional anyway, whether it's lame duck or not. You can call it whatever you want. We're going to have a helluva lot of fun racing, having a good time, doing our jobs."


The 500 will be the first with a full 43-car field racing NASCAR's new Gen-6 car, which was designed all last season with input from teams, drivers and the manufacturers.


Part of the intent was to design a car that more closely resembled what the automakers sell in the showrooms, and NASCAR succeeded in that area. But NASCAR also needed a car that produced better on-track racing, and the verdict is not in yet.


There are a lot of unknowns with the Gen-6 heading into Sunday, partly because drivers spent Speedweeks learning as much as they can about how it handles on the track. All three races so far have been largely uneventful, resembling something closer to a long parade rather than a high-speed spectacle.


If not for Kyle Busch's win in a Toyota in the second of Thursday's twin qualifying races, it would so far be a Chevrolet rout with Harvick taking the new SS to Victory Lane twice and Patrick winning the pole in her Chevy.


All bets could be off on Sunday, Busch warned.


"It might be we all ran single file because we were scared to run side-by-side," Busch said after Thursday's win. "I don't know. I was ready to put on a show, but I didn't have enough people around me to make one happen."


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