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* * * * * * TUESDAY, DECEMBER 11, 2012 ~ VOL. CCLX NO. 137 WSJ.com HHHH $2 .00

WASHINGTON—RepublicanHouse Speaker John Boehneronce again is locked in conten-tious budget talks, which in thepast have ended badly. This time,he is leading negotiations aftermonths spent quietly winning thebacking of his own party.

The unruly freshman class of2010 has thwarted Mr. Boehnernumerous times during his twoyears as speaker. To bolster hisposition, Mr. Boehner has beenslowly bringing Republican fresh-men to his side by introducingthem to the realities of legislatingand congressional leadership.

Mr. Boehner’s strategy, and hisfuture as speaker, will get testedbetween now and year-end asWashington wrestles with negoti-ations designed to avert tax in-creases and spending cuts due tobegin in early January. Mr. Boeh-ner and President Barack Obamamet privately Sunday to discuss abudget deal, their first face-to-face meeting in weeks. On Mon-day, people close to the talks saidnegotiations were getting more“serious.” They said big divisionsremained but didn’t give details.Mr. Boehner declined to commentfor this article.

Mr. Boehner has used both car-rot and stick to unify his ranks,lawmakers said. Rep. Steve South-erland, a voluble freshman, got ajob managing a transportationbill. Three freshmen who contin-ued to defy the House leadershipon key votes got booted fromplum committees. Others learnedthe limits of their power bywatching bills the House passeddisappear in the Senate.

“There’s a lot more cohesive-PleaseturntopageA4

BY PATRICK O’CONNOR

Boehner’sTest: KeepGOP RanksBehindHim

WILMETTE, Ill.—Financial adviser Jeffrey Smithrecently watched a once-confident client scrawlhis fears across a legal pad during a discussion ofstock investments: “Congressional stalemate,” “un-employment,” “European crisis,” “corruption.”

The client, retiree Nicholas Zerebny, later re-called how his thoughts strayed to Edvard Munch’s“Scream” paintings. In the middle of the page, Mr.Zerebny drew a crude version of the iconicscreaming face.

“That’s how I feel right now,” he told Mr. Smith.For Mr. Smith and other U.S. financial advisers,

that anguished cry—real and metaphoric—has be-come a familiar part of the job.

Since hitting a recession-driven low in March

2009, the Dow Jones Industrial Average has dou-bled in value. But many ordinary investors remaintoo fearful to join in the gains.

After two stock collapses in one de-cade—2000-2002 and 2007-2009—along withscandals, the rise of high-frequency trading andworries over Washington’s ability to rein in debt,Americans are pulling out of the market. Individ-ual investors yanked a net $900 billion from U.S.equity funds since January 2000, according tofund flow tracker EPFR Global. Stocks and stockmutual funds now make up 37.9% of the averageU.S. household’s financial assets, down from 50.5%during the height of the tech-stock boom in 2000,according to the U.S. Federal Reserve.

“Is it me or does it seem like a calamity couldPleaseturntopageA16

BY JONATHAN CHENG

ForManyFinancial Advisers,Stocks Become a Hard Sell

Amid Tensions, Europe’s Leaders Accept Peace Prize

Guido

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CONTENTSCFO Journal................. B8Corporate News B2,3,9Global Finance........... C3Health & Wellness D2-4Heard on the Street C10In the Markets.......... C4

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Vital Signs

The Federal Reserve’sbalance sheet continues toexpand as the central bankprepares to tweak its bond-buying program at a two-day meeting starting today.The Fed’s asset holdingsreached $2.86 trillion in theweek ended Dec. 5, up from$2.85 trillion a week earlier.Among the holdings are$1.65 trillion in U.S. Trea-surys and $884 billion inmortgage-backed securities.

Federal Reserve’s total assets,in trillions

Source: Federal Reserve

'09 '10 '11 '12’080

0.5

1.0

1.5

2.0

$2.5

>

HSBC plans to acknowledgethat for years it ignored

possible money laundering,part of a record $1.9 billionsettlement with U.S. officialsthat caps the bank’s disastrousforay into the U.S. market. C1 Standard Chartered agreedto pay $327 million in penal-ties for alleged violations ofU.S. sanctions against Iran,Libya and other nations. C3n Federal prosecutors andsecurities regulators are takinga deeper look into how exec-utives use prearranged tradingplans to buy and sell sharesof their company stock. A1n The EU is weighing a legalcrackdown on some nationalregulators for curbing Euro-pean banks from freely mov-ing funds across borders. C1n U.S. stocks notched mod-est gains to begin the week,with the Dow industrials ad-vancing 14.75 points, or 0.1%,to close at 13169.88. C4n Investors unloaded Ital-ian stocks and bonds follow-ing the weekend’s news thatPrime Minister Mario Montiwould resign early. C4nA 2011 inspection conductedfor a Wal-Mart supplier foundserious fire-safety concernsat a Bangladesh clothing fac-tory that burned last month. B1n The FTC said firms whoseonline stores sell mobile appsfor children should do more toalert parents that the apps arecollecting data on their kids. B3n North America will be-come a net exporter of en-ergy by 2025, Exxon Mobilforecasts in its latest long-term energy outlook. B1n The U.S. will sell off nearlyall its remaining holdings inAIG, amilestone for the govern-ment and the insurer it rescuedduring the financial crisis. C5nMorgan Stanley maysoon ask U.S. regulators toallow the Wall Street firm buyback shares for the first timein more than four years. C3n Japan’s economy shrankfor the second quarter in a rowin the three months throughSeptember, indicating that ithas entered a recession. A14n Delta is close to striking adeal to acquire a 49% stake inVirgin Atlantic, a move thatwould boost the U.S. carrier’spresence at Heathrow. B3nTheU.K.’s central bank chiefwarned of the risk of currencywars in the coming year asnations search for new waysto spur their economies. A12

n Talks between Obama andBoehner show progress.People close to the budgetnegotiations say talks havebecome more “serious” inrecent days, though sizabledifferences remain before adeal can be reached to avertthe “fiscal cliff” of tax in-creases and spending cuts.Both sides have agreed tokeep details private. A1, A4The House speaker has beenusing both carrot and stick towin support from GOP fresh-men for any budget deal.n Karzai launched a crack-down on illegal taxes that al-legedly have enriched Af-ghanistan’s power brokers. A8nA proposed Army handbooksuggestsWestern ignorance ofAfghan culture has driven aspike in insider attacks. A8n The Pentagon identifiedthe sailor killed in the suc-cessful rescue of an Americanheld by the Taliban as a mem-ber of SEAL Team Six. A15n Egypt’s military assumedjoint responsibility with thepolice for security until resultsof this Saturday’s constitu-tional vote are announced. A15n U.S. schoolchildren con-tinue to trail those of majorrivals in math and science ex-ams despite progress on sometests, new results show. A2nWashington warnedMos-cow that a sanctioned Iranianbank’s activities in Russiacould affect Russian banks thatdo business with the U.S. A14n The EU was awarded theNobel Peace Prize as its lead-ers touted the bloc’s achieve-ments, even as they strugglewith an economic crisis. A12nNorth Korea extended thetime frame for a rocket launchby a week, to Dec. 29, citing a“technical deficiency.” A15n Syrian rebels capturedpart of an army base outsideAleppo, tightening their gripon areas close to Turkey. A15n The Obama administrationsaid that states can’t lowerthe income level for people tobe eligible for Medicaid. A6nA Japanese panel said anuclear reactor is likely sittingon an quake fault, potentiallyleading to its shutdown. A14nMali’s primeminister re-signed after being arrested bysoldierswho led the recent coupin theWest African country.A15n Strauss-Kahn settled a sex-ual-assault lawsuit brought bya New York hotel maid. De-tails weren’t disclosed. A15

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Obama-GOP talks take apositive turn.................................... A4

Wyoming Town Hopes to Get Back in the Saddle With Carousel Horsesi i i

Folks in Buffalo Go Round and Round About Ride’s Restoration

BUFFALO, Wyo.—Civic boost-ers say they can help revive thisOld West town at the foot of theBig Horn Mountains by restoringthe only public merry-go-roundin the state.

But opponents worry that thecreaky old carousel will takeBuffalo, pop. 4,600, for a ride.

Built in 1925 by master crafts-men in North Tonawanda, N.Y.,near Niagara Falls, the amuse-ment-park attraction was putout to pasture by its originalowner on the East Coast a quar-

ter century ago.That’s when the owner of a

Super 8 motel on the outskirtsof this town bought it and gaveit a Western makeover, with newhorses sculpted by a local wood-carver.

There is Steamboat, the buck-ing bronco featured on Wyominglicense plates; Little Soldier, apony ridden by a Crow Indian atthe battle of the Little Bighorn;and Comanche, a steed that wasreputed (inaccurately, some his-torians now believe) to havebeen the only member of Lt. Col.George Armstrong Custer’s de-

tachment to survive his infa-mous last stand.

Buffalonians proudly claimthat the Cowboy Carousel, as itis now known, is the only histor-

ically accurate cowboys-and-In-dians merry-go-round in exis-tence—and not one thatkowtows to modern sensibilities.

“OK, not very politically cor-rect these days, but the cowboysare surrounding the Indians,”says Vanessa Vogel, the head ofthe town’s nonprofit onlinenewspaper, pointing out that theIndian ponies are on the insidetrack of the carousel, with thecowboy horses on the outeredge.

But nagging mechanical prob-lems spurred the motel’s late

PleaseturntopageA16

Comanche

BY MIGUEL BUSTILLO

UNION FOREVER? Meeting under the cloud of their continent’s debt crisis, French President François Hollandeand German Chancellor Angela Merkel clasp hands as the European Union claims its Nobel Peace Prize. A12

Federal prosecutors and secu-rities regulators are taking adeeper look into how executivesuse prearranged trading plans tobuy and sell shares of their com-pany stock.

The Manhattan U.S. attorney’soffice has launched a broad crim-inal investigation into whetherseven corporate executives citedin a recent Wall Street Journalarticle traded improperly inshares of their own company’sstock, according to a person fa-miliar with the matter. These ex-ecutives lead companies in in-dustries ranging from retailing

to energy to data processing.Meanwhile, the Securities and

Exchange Commission is examin-ing trading by VeriFone SystemsInc. Chief Executive OfficerDouglas Bergeron, according to aperson familiar with that probe.VeriFone said Mr. Bergeron, oneof those cited in the Journal arti-cle, did nothing wrong.

The probes illustrate that au-thorities have opened a new front

in a three-year push to attackpossible improper trading onWallStreet and in corporate America.

Until now, prosecutors andregulators were focused mainlyon ferreting out traditional in-sider trading in the financialworld, involving outside inves-tors in companies. Some 70 con-victions and guilty pleas fromtraders and others have resultedfrom such efforts.

Now, authorities, includingthe Federal Bureau of Investiga-tion, are turning more attentionto trading by corporate execu-tives in their own company’s

shares. The probe follows theNov. 28 Journal article, which fo-cused on highly beneficial salesby executives that occurred be-fore bad news about their com-panies hit, sparing them declinesin the value of their holdings.

Besides Mr. Bergeron, theJournal reported last week fed-eral prosecutors and the SECwere examining trading of an-other executive cited in the arti-cle, Big Lots Inc. CEO StevenFishman. The company said histrades were “properly made” at atime when allowed.

PleaseturntopageA6

By Susan Pulliam,Jean Eagleshamand Rob Barry

Insider-TradingProbeWidensU.S. Launches Criminal Investigation Into Stock Sales by Company Executives

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