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* * * * * FRIDAY, FEBRUARY 8, 2013 ~ VOL. CCLXI NO. 32 WSJ.com HHHH $2 .00

tors. Apple is proposing to re-quire a shareholder vote beforeit can issue preferred stock, akind of security that Mr. Einhornis urging the company to adopt.Apple’s board already has theright to issue such shares, butsaid in a filing it doesn’t intendto do so.

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Apple Inc. Chief ExecutiveTim Cook is facing a new reality:delivering steady results fromone of the world’s most valuablecompanies is no longer goodenough.

For nearly 18 months, Mr.Cook has kept a stream of newproducts rolling, produced astring of robust quarterly resultsand introduced a dividend andstock buyback expected to cost$45 billion over three years.

But an attack from one of Ap-ple’s prominent investors under-scores how that approach maynot be enough anymore, espe-cially amid intensifying industrycompetition and the company’sslowing growth.

On Thursday, hedge fundmanager David Einhorn sued Ap-ple in a New York federal courtin an effort to block an Appleshareholder proposal that he ar-gues could limit how the com-pany could return some of its$137 billion cash pile to inves-

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Vital Signs Americans put awaytheir credit cards inDecember. Revolving credit,which includes credit-carddebt, dropped a seasonallyadjusted $3.6 billion fromNovember to $849.8 billion.Consumer borrowing rosean annualized 6.5% in thefourth quarter, thanks torising student and autoloans. Credit-card debtrose 0.1%, suggesting thatconsumers are loath to takeon more debt.

Total outstanding revolvingcredit, in trillions

Source: Federal Reserve

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The Texas electricity pro-ducer formerly known

as TXU, which once madeheadlines as the biggest lev-eraged buyout in U.S. his-tory, is now laying ground-work for one of the biggestdebt restructurings. B1n Short-circuits inside a bat-tery triggered a fire on a Boe-ing 787, said U.S. investigators,who also found that the safetyapproval process for thepower devices was flawed. B1n New York’s top prosecutorhas launched an inquiry intothe three major credit-rat-ings firms, opening anotherlegal front for the industry. C1nGreenlight’s Einhorn suedApple in a bid to block an Ap-ple shareholder proposal thathe argues could limit how thecompany could return someof its cash pile to investors. A1n ECB chief Draghi left thedoor open to economic-stim-ulus measures if the euro’sstrength undermines growthprospects. His commentssent the currency lower. A8n Growth-sensitive sectorshelped pull stock indexes loweramid worry about Europe andunderwhelming economic data.The Dow fell 42.47 points. C4n Some early signs suggestthat consumers are cuttingback on spending after thepayroll-tax holiday ended, butmany retail chains still turnedin strong January sales. A2, B3n Economists are forecastingthe same steady, if unspectac-ular, U.S. growth this year thatthey expected in 2012, a WallStreet Journal survey found.A2nA Fed official pointed tosigns of overheating in somecorners of the credit markets,raising questions about dealingwith the trend if it persists. A2n The anticipated marriageof AMR and US Airways isaimed at creating a hugeroute network that wouldleapfrog the competition. B1n Goldman Sachs is makingmajor changes to its $50 bil-lion private-equity fundbusiness because of the im-pending “Volcker rule.” C1n Germany’s Daimler cau-tioned that its earningswould likely stagnate thisyear and decline at its flag-ship Mercedes-Benz unit. B3n Sony posted an unex-pected quarterly loss, dem-onstrating the depth of theproblems facing the com-pany’s electronics business. B5n India forecast that growth inthe current year would be itsweakest in a decade, a setbackto hopes of it being a significantdriver of global recovery. A14n Credit Suisse swung to afourth-quarter profit as costreductions and a shift in fo-cus at its investment bankbolstered results. C3nTensions are rising betweenRio Tinto and the Mongoliangovernment over the com-pany’s big copper-mine proj-ect in the Gobi Desert. B1

nSenators questioned Bren-nan over CIA interrogations.Members of the Senate intelli-gence panel confrontedObama’s pick to head the spyagency with findings in a clas-sified report that criticizedmanagement of the now-de-funct program. One senatorsaid the report points to sys-temic problems at the CIA thatcould affect its ability to carryout other sensitive programs—such as targeted drone killingsof terrorist suspects. A4, A14Iran’s state TV broadcastfootage reportedly extractedfrom a CIA spy drone cap-tured in December 2011.nThe Pentagon, CIA and StateDepartment backed a plan toarm Syrian rebels, but theWhite House decided not to act,Panetta and Joint Chiefs Chair-man Dempsey disclosed.A1nDamascus remained tense,with sporadic clashes in someareas, a day after some rebelfactions began an offensive forcontrol of the Syrian capital.A9nPanetta andGen. Dempseydefended the Pentagon’s reac-tion to the Benghazi attack,drawing a hostile responsefrom Senate Republicans.A9n Iran’s supreme leader re-jected a U.S. proposal for one-on-one talks, dimming hopesthe two nations would resumediplomatic relations soon.A9n Japan said Russian fighterjets violated its airspace. Russiadenied the accusation, whichcomes as Tokyo is engaged in aterritorial rowwith China.A14nTunisia’s Islamist party re-jected the premier’s decision toreplace the government, whichcame in the wake of an opposi-tion leader’s assassination.A9nThe choice of Pritzker ascommerce secretary could pitwomen’s advocates againstunions angry over workers’safety at her family’s hotels.A4nA series of killings in Cali-fornia, allegedly by a formerLos Angeles police officer seek-ing revenge for his firing,sparked amassivemanhunt.A6nTheNortheast braced for ablizzard that threatened todump up to two feet of snowacross a swath of New Englandand themid-Atlantic.A6nScientists converted humanskin cells into brain cells andused them to treatmice withmyelin disorders, a family ofdiseases that includesMS.A6n Immigrants’ adult childrenaremuch better off than theirparents’ generation and at leastas successful as the general U.S.population, a study found. A3nU.S. Catholic bishops cameout against the latest adminis-tration offer to resolve a stand-off over mandatory insurancecoverage for contraception. A3n Armstrong was sued in abid to recover $12 millionpaid to the former cyclist forthree Tour de France wins. A3nFish are guided by theEarth’s magnetic field to navi-gate hundreds of miles in openwater, scientists reported.A6

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Many anonymous traders areimplicated in the tall stack ofdocuments regulators publishedthis week detailing Royal Bankof Scotland Group PLC’s at-tempts to rig the lending bench-mark known as Libor. But onlyone trader is cited by name: a33-year-old so brainy yet sociallyawkward that colleagues nick-named him “Rain Man.”

Regulators portray that man,Tom Hayes, as the connectivetissue in pervasive efforts byseveral banks to boost tradingprofits by manipulating the Lon-don interbank offered rate. Mr.Hayes hopscotched from RBS tothe Royal Bank of Canada to UBSAG to Citigroup Inc., picking upthe contacts and know-how thatwould be necessary to game Li-bor.

In one electronic chat re-leased in connection with regu-lators’ $612 million settlementwith RBS this week, Mr. Hayesasked another bank to skew Li-bor “too low for the next fewdays,” promising to “return thefavour as when you need it.”

Yet Mr. Hayes often actedwith the knowledge of bossesmindful of his ability to rack upbig trading profits. When Citi-group in 2009 sought to lurehim away from UBS with a $5million job offer, some at UBSfought to keep Mr. Hayes by tell-ing UBS executives of his abilityto tap contacts who could nudgeLibor up or down. His “strongconnections with Libor setters inLondon [are] invaluable,” hisboss wrote in an email to execu-tives, including one who now co-heads the firm’s investmentbank.

Citigroup managed to hire Mr.Hayes. With his expertise inhand, the bank signed up to helpset the Tokyo counterpart of Li-bor. The goal of some at thebank was to enable Mr. Hayes tomanipulate that rate, said peoplefamiliar with the decision.

Mr. Hayes soon morphed fromcoveted asset to liability. Citi-group fired him less than a yearafter hiring him, amid an inter-nal probe it undertook when an-other employee raised concernshe was making inappropriate re-

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WASHINGTON—A proposal toarm Syrian rebels was backed bythe Pentagon, the State Depart-ment and the Central IntelligenceAgency, but the White House de-cided not to act on the plan.

Defense Secretary LeonPanetta and Gen. MartinDempsey, the chairman of theJoint Chiefs of Staff, revealedpublicly for the first time at aSenate hearing on Thursday thatthey supported the proposal lastyear by senior officials includingthen-Secretary of State HillaryClinton and then-CIA directorDavid Petraeus.

The officials came to favor theplan last year with the meltdownof an international diplomaticinitiative to end the Syrian civilwar, according to current andformer officials involved in thedeliberations.

The White House stalled theproposal because of lingeringquestions about which rebelscould be trusted with the arms,whether the transfers wouldmake a difference in the cam-paign to remove Syrian leaderBashar al-Assad and whether theweapons would add to the suf-fering, the U.S. officials said. AU.S. official cited the findings ofa CIA team of analysts, whichcast doubt on the impact of arm-ing the rebels on the conflict.

The disclosures thrust a spot-

light on the extent to whichPresident Barack Obama chartshis own course in the face ofcalls to action by members of hisown team, and on the extent ofhis caution about entering a newconflict. The White House de-clined to comment on internaladministration deliberations.

In the months after the startof the conflict in Syria in March2011, the Pentagon, the State De-partment and the CIA began pre-senting the White House withmultiple options for interveningwith force, covert action or armssupplies.

Options have included estab-

lishing a no-fly zone, bombingSyrian aircraft in their hangars,and funneling light arms and ac-tionable intelligence to a select

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BY ADAM ENTOUS

Obama Blocked Rebel ArmsWhiteHouseOpposedPentagon, CIA, StatePlan toShipWeapons to SyrianResistance

By Jessica E. Lessin,Telis Demos

and David Benoit

Apple Cash PileSets Off a Battle

BY DAVID ENRICH

Rate-Rig SpotlightFalls on ‘RainMan’

The Year of the Snake DrawsHisses—And Yawns

i i i

Chinese Flock to Get Married, Have BabiesBefore Calendar Flips FromDragon to Serpent

When Lunar New Year arrivesin China, that year’s symbol—adragon, an ox or another charac-ter in the Chinese zodiac—is ev-erywhere. Days before the Yearof the Snake begins,there has been little af-fection for the slither-ing reptile.

On Saturday, the veryauspicious Year of theDragon draws to a close,leaving behind piles ofdragon toys and dragondecorations, along withthousands of new mar-riages and babies. Sun-day marks the start ofthe Year of the Snake, asomewhat less auspi-cious symbol that is hard towarm up to.

In some quarters, the snakehas been banished altogether.Hong Kong’s annual Lunar New

Year parade is one of the city’scrowning holiday events, andtypically the Zodiac animal ofthe season is out in force, saysMason Hung of the Hong KongTourism Board. In 2012, a 100-foot floating dragon made an ap-pearance. The year before that,

during the Year of theRabbit, some 50 chil-dren dressed like rabbitscharmed the crowd.

Not this year. Lastsummer, the city asked adesign agency to comeup with ways to incor-porate a serpent motif.All of the proposalswere rejected. “The vi-sual effect was not ap-pealing,” said Mr. Hung.“This year, we havetried to do away with

snakes and replace them withcandies and balloons to createthe atmosphere of a streetparty,” he said of the parade, ex-

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Toy snake

BY TE-PING CHENAND FIONA LAW

On ReserveApple’s cash andinvestments, inbillions

Source: FactSet The Wall Street Journal

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A Syrian rebel fighter and a comrade tote a B-10 recoilless rifle down a dust-filled stairway Thursday in Damascus.

Goran

Tomasevic/R

euters

Panetta and Gen. Dempseydefend Benghazi response..... A9

CIA pick defends drones.......... A4

Heard on the Street: BehindEinhorn’s Apple math.................. C1

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