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Hearing set for man tied
to Islam film

LOS ANGELES — The man thought to have been behind the crude anti-Islam video that set off deadly protests across the Muslim world in recent weeks was arrested Thursday for violating terms of his probation in a 2010 bank fraud case.

The man, Nakoula Basseley Nakoula, 55, was scheduled to appear in U.S. District Court here late Thursday afternoon, according to Thomas Mrozek, a spokesman for the U.S. attorney’s office. Details of his arrest were not immediately available; the news media was barred from the courtroom, but Mrozek said journalists would be able to view the appearance by video conference from another court center.

Nakoula is widely considered to be the filmmaker responsible for “Innocence of Muslims,” an inflammatory, amateurish video that is supposedly a trailer for a full-length film. It depicts the Prophet Muhammad as a buffoon, a womanizer and a child molester. It was first uploaded to YouTube in June, and translated into Arabic and uploaded several more times leading up to the 11th anniversary of the terrorism attacks of Sept. 11, 2001.

Federal officials have been investigating whether Nakoula was the person who posted the video on YouTube using the pseudonym Sam Bacile, a name he used during the making of the movie, according to actors and crew members. If he did post the video, he would have violated the terms of his sentencing in a conviction in a 2010 check-kiting case, which restricted his use of the Internet.

—Brooks Barnes, The New York Times

Fearing fiscal cliff, investors
cash in and seek safety

After riding a quarter-long rally fueled by central bankers in Europe and the U.S., investors are taking a more defensive posture on fears that politicians could derail the momentum.

When the third quarter comes to an end on Friday, the Standard & Poor’s 500-stock index is set to close up over 5 percent for the quarter and 15 percent for the year, largely because of excitement about the unexpectedly aggressive bond-buying pledges by the Federal Reserve and the European Central Bank over the last few months. Speculation on Thursday of impending stimulus from the Chinese government helped push stocks up despite generally downbeat economic data.

With central banks having made their plans clear, investors are training their attention on the outcome of the U.S. elections. They are also awaiting negotiations in Washington over the so-called fiscal cliff, when a series of tax cuts expire at the end of the year. European leaders, meanwhile, have been hesitating on moving forward with bailout programs that were announced over the summer. In both instances, analysts are anticipating that politicians may not act until forced — setting the markets up for weeks of angst.

—Nathaniel Popper, The New York Times

Rebels announce offensive amid new warnings on refugees

BEIRUT — Rebel fighters in the northern Syrian city of Aleppo said Thursday that they had launched a major offensive against government troops in the city, just as the United Nations and humanitarian agencies warned that the number of Syrians fleeing to neighboring countries could surge past 700,000, far exceeding earlier estimates.

Activists in Aleppo, a city ravaged by months of a brutal but inconclusive battle between insurgents and the military, said the offensive was announced around 4 p.m., with calls from the city’s mosques. Members of the rebel Tawhid Brigade declared the start of a “decisive” battle in Internet videos, including one that showed fighters from the unit wearing matching white headbands, walking with weapons down a deserted street.

The offensive involved hundreds of rebel fighters attacking government positions on several fronts, members of the brigade said.

Their claims could not be immediately verified, but late Thursday night, activists in the city reported heavy clashes and shelling in several neighborhoods.

The reported offensive in Aleppo followed days of brazen rebel attacks on Syrian military positions.

—Hwaida Saad and Nick Cumming-Bruce
The New York Times

Goldman to pay $12 million to settle sec‚ ‘pay to play’ case

Goldman Sachs on Thursday settled federal allegations that one of its investment bankers curried favor with a public official to win lucrative government contracts in Massachusetts.

The Wall Street bank struck a $12 million settlement with the Securities and Exchange Commission to resolve the “pay to play” accusations without admitting or denying guilt.

The banker, Neil M.M. Morrison, who was a vice president at the firm, did not settle with the agency. His lawyer did not return a call for comment.

The SEC’s order suggested that Morrison helped win government business for Goldman after promoting his strong ties to the Massachusetts state treasurer at the time, Timothy P. Cahill, who was indicted on public corruption charges in April. Morrison, the agency said, in essence ran a campaign office for Cahill out of Goldman, acting as a fundraiser and speechwriter during work hours and using the company’s email system and phones.

The campaigning, which spanned from 2008 to 2010, also led Morrison to indirectly contribute money to Cahill. Morrison, regulators say, supplied $400 in cash to a friend who then wrote a check to the treasurer’s campaign. During the same period, the SEC says, Morrison began soliciting public contracts for Goldman, a conflict of interest that violates securities laws. Goldman ultimately snared 30 “prohibited” deals to help arrange Massachusetts bond offerings.

—Susanne Craig and Ben Protess, The New York Times