YELLOW

* * * * * * FRIDAY, FEBRUARY 7, 2014 ~ VOL. CCLXIII NO. 31 WSJ.com HHHH $2 .00

As the Winter Olympics Open,Putin Showcases a Defiant Russia

GRAND AMBITION

A jury found Mathew Mar-toma guilty of insider tradingThursday, handing prosecutorstheir eighth win against someonewho worked at SAC Capital Advi-sors LP and possibly bolstering arelated case against firm founderSteven A. Cohen.

Prosecutors have long pur-sued Mr. Cohen, who built one ofthe country’s most successfulhedge funds over the past twodecades and managed more than$15 billion at the firm’s peak. Hehas denied involvement in anywrongdoing and hasn’t beencharged criminally, but he facesa civil allegation by the Securi-ties and Exchange Commissionthat he failed to adequately su-pervise two senior employees athis firm.

Both of those men, Mr. Mar-toma and Michael Steinberg,have now been convicted oncriminal charges. Mr. Martoma,39 years old, was found guiltyThursday of taking part in whatprosecutors say was one of thelargest insider-trading schemesever—illegal trades on two phar-maceutical companies thathelped SAC and its traders bookprofits and avoid losses worth atotal of $275 million.

Those dual convictions couldhurt Mr. Cohen’s defense. Thetrades at the heart of Mr. Mar-toma’s case, for instance, aresome of the same ones the SEC

Pleaseturntothenextpage

BY CHRISTOPHER M. MATTHEWSAND JOHN CARREYROU

Ex-SACTraderFoundGuilty

House Speaker John Boehnersquashed growing expectationsthat Congress would rewrite im-migration laws this year—dealinga setback to the White House, aswath of U.S. businesses and abloc of fellow Republicans seek-ing to improve their party’schances with Hispanic voters.

Rank-and-file Republicanshave voiced few complaints about

the GOP’s latest ideas for an im-migration overhaul, which in-clude some legal status for mostof the 11.5 million people in theU.S. illegally. But many balked atdebating an issue that divides Re-publicans and feared giving thepresident a legislative victory inan election year. Some suggestedpushing the issue to 2015, whenRepublicans might have controlof the Senate and more leverage.

Many in GOP ranks also ex-pressed distrust that President

Barack Obama would enforce anylaw they pass. “There’s wide-spread doubt about whether thisadministration can be trusted toenforce our laws,” Mr. Boehnertold reporters. “It’s going to bedifficult to move any immigrationlegislation until that changes.”

The White House respondedthat it has aggressively enforcedimmigration laws.

The move represents an effortby Mr. Boehner to apply thebrakes amid heightened expecta-

tions after the GOP unveiled itsideas last week at a retreat inMaryland. It still remains possi-ble he could bring legislation tothe floor this summer, after manyRepublican primaries are over, orlate in the year, after the elec-tions.

Ali Noorani, who heads a pro-immigration coalition of reli-gious, law-enforcement and busi-ness leaders, said he was told bycongressional aides to “take a

PleaseturntopageA4

BY LAURA MECKLERAND KRISTINA PETERSON

Immigration Overhaul StallsBoehner Applies Brakes as GOPMoves to Avoid Divisive Fight Over Obama Priority

SOCHI, Russia—On Friday night, RussianPresident Vladimir Putin will entertain worldleaders at a reception under soaring, Corin-thian-style columns and a giant, sparklingchandelier in the Atrium ballroom of the Sta-lin-era Rus Sanatorium.

It will be one of the most exclusive eventsof the Winter Olympics here, but Mr. Putin’sguest list has some big gaps. Few of theWestern world’s most prominent leaders willbe there, declining entreaties to attend, ac-cording to diplomats and government offi-cials.

Instead, Russia’s president will be sur-rounded by Chinese President Xi Jinping,

Ukrainian President Viktor Yanukovych andBelarus President Aleksandr Lukashenko.North Korea is sending its second-highest of-ficial, even though the country has no ath-letes competing at the Sochi Games.

The 61-year-old Mr. Putin landed the firstWinter Olympics ever hosted by Russia in2007 with a charm offensive that includedwowing International Olympic Committee of-ficials at a meeting in Guatemala City with aspeech in English and French, the two officiallanguages of the Olympics.

But the lack of top U.S. and European offi-cials at Mr. Putin’s fancy reception and the17-day Sochi Games shows hostility to thenew political creed Mr. Putin has pursuedsince his return to the Kremlin in 2012. In his

third term as president, the former KGB of-ficer has crusaded against Western influencethroughout the world and emphasized Rus-sia’s “traditional values,” a contrast to hisearlier efforts to draw Russia closer to theU.S. and Europe.

In foreign policy, the move has shaped theKremlin’s resistance to Western efforts to usehuman-rights violations as justification forintervention in Syria’s civil war and otherconflicts. Mr. Putin’s ability to help stave offU.S. strikes against Syrian President Bashar

PleaseturntopageA10

BY GREGORY L. WHITE AND PAUL SONNE

WASHINGTON—The Pentagonhas dropped a plan to retire oneof its nuclear-powered aircraftcarriers after the White Houseintervened to head off a brewingpolitical fight.

The military had proposed anearly retirement of the USSGeorge Washington, reducingthe U.S. carrier fleet to 10, aspart of plan to deal with costcuts imposed by Congress. Thattouched a nerve among a bipar-tisan group of lawmakers, whocalled on Defense SecretaryChuck Hagel in a letter last weekto block the move and preservewhat they argued is a potentsymbol of American power.

The behind-the-scenes battleillustrates how politics oftencomplicates the task of wringingsavings from the U.S. militarybudget. Lawmakers, facing pres-sures from defense contractorsand local communities, often op-pose proposed cuts to militarybases, aircraft and shipbuildingprograms and weapons systems.

Last year, a strategic reviewby Mr. Hagel on the impact ofthe mandated across-the-boardspending cuts found the U.S.could reduce the carrier fleet toeight or nine—still enough toequal the number of carriers op-erated world-wide by sevenother nations.

But as the controversy beganto build about taking the firststep in that process, it becameclear that any proposal endorsedby the White House to retire anaircraft carrier likely would havebeen blocked by Congress, open-ing Democrats to election-yearcriticism, officials familiar withthe discussions said.

White House officials headedoff the issue by telling defenseofficials in recent days that theywould provide extra money—ineffect raising the military’s pro-posed budget—to allow the Navyto extend the life of the GeorgeWashington, commissioned on

PleaseturntopageA4

BY JULIAN E. BARNES

PentagonDrops PlanToMothballA Carrier

LAS VEGAS—Forget BritneySpears and Cirque du Soleil. Formany gamblers, the hottest at-traction in Sin City is an out-dated three-reel slot machinethat hasn’t produced a jackpot innearly two decades.

It is called theLion’s Share, and inthis city with no short-age of losing bets, the20-year-old slot has at-tracted a legion ofever-hopeful devoteeson the floor of theMGM Grand, theStrip’s second-biggestcasino.

The machine’s mi-serly track record may,paradoxically, make itthe rarest of all Vegastreats: A decent bet. A genera-tion of players has already lostmoney on it, helping more thandouble the progressive jackpotto an improbable $2.3 million.

“You see the sharks swim-

ming around, scoping you out,”said Washington state residentLief Anderson. The 64-year-oldis a second-generation Lion’sShare player: He took over thefamily quest from his late father10 years ago.

According to long-establishedslot etiquette, the seatis first-come, first-serve, and the playercan stick around untilhe is exhausted or outof money—or both. Ona $3 maximum bet (themachine takes $1 and$2 bets, too) a playercan earn up to $10,000without hitting thejackpot, and small hitscan keep someone inhis vinyl seat for manyhours.

At 23, Justin Paulusis barely older than the machineis, but the engineer is so com-mitted to taking his shot that hefell asleep at it repeatedly dur-ing a six-hour overnight session

PleaseturntopageA8

BY ROB COPELAND

Vegas’s Biggest HeadlinerIs Outdated and Very Mechanical

i i i

Gamblers Keep a Vigil on Aging SlotMachineThey Expect to Disgorge $2.3 Million Soon

Lion’s Shareslot machine

DJIA 15628.53 À 188.30 1.2% NASDAQ 4057.12 À 1.1% NIKKEI 14155.12 g 0.2% STOXX600 322.77 À 1.5% 10-YR. TREAS. g 9/32 , yield 2.702% OIL $97.84 À $0.46 GOLD $1,257.60 À $0.30 EURO $1.3590 YEN 102.12

ARENA: SOCHI 2014

How Stars Overcome FlawsMANSION Small Homes That Live Large

CONTENTSBusiness Tech. ........... B5Corporate News.... B1-3Global Finance............ C3Heard on Street........ C8In the Markets........... C4Markets Dashboard C5

Movies....................... D6-8Opinion................... A11-13Sports.......................... D1-5Television............. D10-11U.S. News................. A2-5Weather Watch........ B6World News........... A6-9

s Copyright 2014 Dow Jones & Company.All Rights Reserved

>

What’sNews

i i i

World-Widen Boehner squashed expec-tations that Congress wouldoverhaul immigration lawsthis year, an issue that hasdivided Republicans. A1nThe U.S. imposed new en-forcement actions against firmswith ties to Iran, as Congresspushed for a tougher postureahead of nuclear talks.A6n Iran has let al Qaeda facili-tate themovement of Sunnifighters into Syria, the U.S. said.Tehran denied the charges.A6n Syria agreed to let civiliansleave the besieged center ofHoms, followed by food deliv-eries to those who remain. A7n The Pentagon dropped aplan to retire one of its air-craft carriers after the WhiteHouse intervened. A1n Lawmakers reached a dealon a five-year plan to changehow physicians are paid fortreating Medicare patients. A4nThe federal government isscaling back the role of USIS,which carried out the flawedSnowden background check.A4n Pakistan’s government anda Pakistani Taliban-nominatedpanel met for the first time ina bid to open peace talks. A9n Congressional leaders arepushing to impose federal stan-dards for protecting the electricgrid from physical attacks. B3nControlling hypertensionand other pregnancy-relatedfactors can reduce a woman’srisk of stroke, a study said. A3nTurkey’s parliament passeda bill to let officials shut web-sites without a court ruling. A7nDied: Ralph Kiner, 91, base-ball slugger and broadcaster.

i i i

TheDow rose 188.30 to15628.53, its biggest gain of

2014, on upbeat jobless-claimsdata ahead of the release of theJanuary employment report. C4 Investors swapped out ofU.S. equity funds and intobonds at the fastest clip on re-cord in the latest week. C4nApple said it has bought$14 billion of its own sharessince reporting results thatdisappointed Wall Street. B1n Ex-SACmanager Martomawas found guilty of insidertrading, another win for pros-ecutors related to the firm. A1nU.S. exports fell in Decem-ber, widening the trade gap to$38.70 billion, but energysales overseas set a record. A2nThe ECB putmarkets onalert for possible future ratecuts even as it kept its mone-tary policies unchanged. A8n High-frequency tradershave been paying to get di-rect access to market-mov-ing news releases. C1n Sony said it would cut5,000 jobs in its TV and PCbusinesses and forecast a $1.1billion loss for fiscal 2014. B1nOcwen’s $2.7 billion deal tobuy mortgage-servicing rightsfromWells Fargo was haltedby a New York regulator. C1nGM’s quarterly net fell 13%on weak results in global oper-ations outside of China. B4n IBM is looking for a buyerfor its semiconductor-manu-facturing operations. B3n LinkedIn projected lowerrevenue than analysts expected.Its shares fell 8% after hours. B2

Business&Finance

False Note for Japanese ‘Beethoven’

STRANGE TUNE: A musical ghostwriter alleged Thursday thatacclaimed Japanese composer Mamoru Samuragochi, thought to be deaf,didn’t compose much of his music and appears to hear normally. D1

AFP

/Getty

Images

U.S. blames Russia for leak of profane call... A6 Criticism of Sochi preparation prompts

‘shower cam’ comment......................................... D2

Eyes on the Prize: Bin Laden Ally Kicks Off Afghan Campaign

RUNNING MATE: Former Islamist warlord Abdul Rasoul Sayyaf, center, Thursday launched his run to succeed President Hamid Karzai. See WSJ.com

Rahm

atGul/A

ssociatedPress

CM Y K CompositeCompositeMAGENTA CYAN BLACK

P2JW038000-6-A00100-10EFFB7178F CL,CX,DL,DM,DX,EE,EU,FL,HO,KC,MW,NC,NE,NY,PH,PN,RM,SA,SC,SL,SW,TU,WB,WEBG,BM,CC,CH,CK,CP,CT,DN,DR,FW,HL,HW,KS,LA,LG,LK,MI,ML,NM,PA,PI,PV,TD,TS,UT,WO

P2JW038000-6-A00100-10EFFB7178F