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Money market pioneer
cleared of fraud

Regulators failed Monday to win a clear victory over the father-and-son team whose mutual fund failed in one of the signal events of the 2008 financial crisis. It was the latest setback in efforts by regulators to hold individuals responsible for the risk-taking that nearly brought down the U.S. economy.

A Manhattan federal jury rejected claims by the Securities and Exchange Commission that Bruce Bent, the inventor of a popular investment vehicle called a money market fund, defrauded investors when his flagship fund collapsed in September 2008, sowing panic among ordinary investors.

The collapse was particularly galling because the fund, the Reserve Primary Fund, run by Bent and his son, Bruce Bent II, was pitched to investors as a nearly risk-free alternative to a bank account. The fund ended up foundering under the weight of hundreds of millions of dollars of bonds issued by Lehman Bros. that became worthless with Lehman’s bankruptcy on Sept. 15, 2008.

The prosecutors accused the men of misleading investors and the company’s trustees as the fund’s investments lost value, allowing more sophisticated investors to withdraw their money before less informed investors knew anything was wrong.

—Nathaniel Popper and Jessica Silver-Greenberg
T

EU

BRUSSELS — The European Commission said Monday that it would seek to delay a plan to charge foreign airlines for greenhouse gas emissions for one year, potentially removing one of the most contentious issues clouding trade relations with China, India,

The system, which requires airlines using an airport in Europe to obtain or buy permits corresponding to the amount of gases they emit, had generated intense opposition among foreign governments. They accused the European Union of violating their sovereignty and unfairly raising the costs paid by airlines from developing countries by imposing its environmental standards on the world.

Europe had insisted the law was necessary because of a failure to control pollution from air traffic, which represents about 3 percent of global carbon dioxide emissions and is growing much faster than efforts to cut them.

Connie Hedegaard, the European climate commissioner, said she had asked the bloc’s 27 governments to “stop the clock” on the system for one year; the first payments under the program would have been due in April.

—James Kanter, The New York Times

Ex-presidential aide sentenced in Br

RIO DE JANEIRO — Brazil’s high court on Monday sentenced one of the most powerful figures in the governing Workers Party to nearly 11 years in prison for orchestrating a vast vote-buying scheme, sending shock waves through Brazil’s political establishment.

Justices in the Supreme Federal Tribunal, or Supreme Court, announced that José Dirceu de Oliveira e Silva, a top ally and former chief of staff of Brazil’s popular former president, Luiz Inácio Lula da Silva, was sentenced to 10 years and 10 months in prison after being found guilty of charges that are roughly the equivalent of unlawful conspiracy and bribery.

The length of the sentence for such an influential political operative, who is commonly called José Dirceu in Brazil, and the mere possibility that he could spend some time in prison before being paroled, stood as precedent-setting shifts in a political culture in which impunity in corruption cases has traditionally prevailed, legal scholars said.

—Simon Romero, The New York Times