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FRIDAY, JANUARY 4, 2013 ~ VOL. CCLXI NO. 3 WSJ.com HH $2 .00

In Iran’sFactories andShops,Tighter Sanctions Exact Toll

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Movies............................. D5Opinion................... A11-13Sports......................... D2-4Theater........................... D9U.S. News................. A2-5Weather Watch........ B6World News........... A6-9

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Vital Signs

Jobless claims rose in thefinal week of 2012. Initialclaims for unemploymentcompensation climbed by10,000 to 372,000 in the weekended Dec. 29, the LaborDepartment said. Recentreadings have been volatilebecause of the holidays andsuperstorm Sandy. But layoffsremain below their year-agolevel, stoking optimism formore labor-marketimprovement in 2013. A2

Initial jobless claims,in thousands

Source: Labor Department

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U .S. antitrust regulatorsprobing Google’s business

practices came up virtuallyempty-handed, preserving thedominant Web-search busi-ness and dealing a blow to ri-vals such as Microsoft. A1, A2n Fed officials were dividedover how long to continuebond-buying programs to spurthe economy, minutes fromtheir latest meeting show. A2n Stocks ended lower in thewake of the Fed minutes, snap-ping a two-day win streak, withthe Dow industrials falling21.19 points to 13391.36. C4n Transocean will pay $1.4billion to settle all federalcriminal and civil claims fromthe Deepwater Horizon acci-dent in the Gulf of Mexico. A3n Cautious U.S. consumersrestrained their spending inDecember, making for a gen-erally mixed holiday seasonfor the retail industry. B1n U.S. auto sales finishedthe year strong despite eco-nomic uncertainty, with buy-ers heading to dealers to re-place aging vehicles. A10n A strong report on private-sector hiring in December liftedsome economists’ expecta-tions for the federal employ-ment snapshot due today. A2n Investors are jumping outof mutual funds managed byprofessional stock pickers infavor of lower-cost funds thatecho the broader market. A1n U.S. government bondshave had a tough start to theyear, with prices for the 10-year Treasury tumbling, in asurprise to many observers. C1n David Sokol, an ex-Berk-shire Hathaway executive whoresigned amid questions abouthis stock purchases, won’tface enforcement action bythe SEC, his lawyer said. C1nWegelin, Switzerland’s old-est bank, pleaded guilty to acriminal conspiracy charge andadmitted that it helped wealthyAmericans evade taxes. C2n A technical issue affectingsecurities listed on the NasdaqStock Market resulted in stockprices and index levels thatappeared frozen in time. C3n Some traders say the mar-ket for complex derivativescalled swaps remains cloudydespite new rules aiming formore transparency. C1n A former hedge-fundmanager at an affiliate ofSAC Capital, Mathew Mar-toma, pleaded not guilty toinsider-trading charges. C3n Boeing said it delivered601 commercial jets last year,likely topping rival Airbus tobecome the world’s largestaircraft manufacturer. B3n Activist investor WilliamAckman has given up his ef-forts to force mall giant Gen-eral Growth Properties toput itself up for sale. B4n Toyota and Audi are plan-ning to show self-drivingcars and technology at theConsumer Electronics Show. B3

n Boehner was re-electedas speaker despite discord.Nine Republicans voted forsomeone else to lead theHouse as Boehner continuedto struggle to unify hisparty. The new Congressconvened against a backdropof looming fiscal showdownsover the nation’s debt ceilingand across-the-board spend-ing cuts that are scheduledto take effect in March. A4Three Republicans votedfor Cantor as speaker andtwo backed defeated Flor-ida congressman West.n Indian authorities movedquickly to assuage publicoutrage, filing formal mur-der charges against five menalleged to have gang-rapedand killed a 23-year-old stu-dent in December. A6nMorsi dispatched topaides to the U.A.E. to quell adiplomatic dispute over thearrests by Emirati authori-ties of Egyptians accused ofbeing part of fomenting ter-rorism in the Gulf nation. A6n Obama signed a defense-policy bill, drawing com-plaints from human-rightsadvocates that he was break-ing a promise to close a ter-rorist-detention system. A5n A U.S. drone strike killeda Pakistani militant leaderwhose group cooperatedwith Afghan Taliban fightersin attacks on U.S. troops. A7n Spain has been quietlydraining the nation’s SocialSecurity Reserve Fund as abuyer of last resort for Span-ish government bonds. A7n Coastal residents in thesouthern U.S. are pushingback against insurers theysay are charging too muchfor hurricane coverage. A3n The U.S.’s largest nursesunion said it would team upwith a union representingother health-care workers,seeking to be the sector’sdominant labor group. A3n A hunger strike by a Na-tive American chief in Can-ada over alleged land-rightsabuses and other grievancesis stoking protests that arespilling over into the U.S. A9n Google’s Eric Schmidtplans to travel to North Ko-rea with an unofficial U.S.delegation this month. A8n South Sudan accused Su-dan of attacking its troopsalong the nations’ oil-richborder ahead of a plannedpresidential summit. A9n Nigeria is starting tochallenge Somalia as Africa’smost dangerous place to sailafter a surge in attacks. A9n Strict curfews imposedby the U.S. military in Oki-nawa have ended up creatingnew frustrations among bothtroops and residents. A8n Putin granted citizenshipto French actor Gérard De-pardieu, who is fightingFrance over his taxes. A7n Died: Sergiu Nicolaescu,82, Romanian film director.

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What’s News–i i i i i i

A manager of Bam Shargh Isogam, an Iranianmanufacturer of insulation sheets for rooftops, sawtrouble ahead when a government official offeredadvice for surviving the crippling internationalsanctions: Reduce quality and cut back production.

The manufacturer in Delijan, three hours southof Tehran, replaced the high-quality material im-ported from Europe with domestic material, dis-missed more than half its 350 employees, anddidn’t pay the remaining workers for four months,managers said.

“From the owner to the line worker, no one issafe,” said Bijan, a manager, who asked that hislast name not be used. “Our country is facing aneconomic disaster.” Company officials didn’t returncalls asking for comment.

Western sanctions against Iran, combined withyears of economic mismanagement by the coun-try’s government, have hammered Iran’s currency

and its economy. The economy was predicted tocontract by nearly 1% in 2012, according to the In-ternational Monetary Fund, after registering an-nual growth above 6% for much of the past decade.The IMF said Iran’s economy could grow again in2013, but stressed that the collapse of the cur-rency, inflation and reduced oil sales were workingagainst a rebound.

Washington has sanctioned Iranian institutionsgoing back to the months following the 1979 Is-lamic Revolution. But it was 2010 legislation thatmarkedly changed the financial war against the re-gime, according to U.S. and European officials.

Previously, U.S. sanctions only targeted Ameri-can companies doing business with blacklisted Ira-nian entities. The 2010 law required the WhiteHouse and U.S. Treasury to sanction any company,American or foreign, conducting proscribed Iraniantrade, and placing at risk their access to the U.S. fi-nancial system. The West intensified the sanctions

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U.S. antitrust regulators whospent nearly two years probingGoogle Inc.’s business practicescame up virtually empty-handed,preserving the company’s domi-nant Web-search business anddealing a blow to competitorssuch as Microsoft Corp.

The Federal Trade Commis-sion said Thursday it wouldn’tbring charges against Google af-ter a 19-month investigation into

whether the company favored itsown products and services in itssearch results and unfairlyharmed rivals.

The decision essentially up-holds Google’s central argumentthat its innovations benefited us-ers. The Mountain View, Calif.,company can continue to displayany Web-search result it deemsappropriate.

“Although some evidence sug-gested that Google was trying toeliminate competition, Google’sprimary reason for changing the

look and feel of its search resultsto highlight its own productswas to improve the user experi-ence,” said FTC Chairman JonLeibowitz.

While Google made some vol-untary changes to satisfy regula-tors, they weren’t part of a bind-ing legal settlement. That drew astinging dissent from FTC Com-missioner J. Thomas Rosch.

“After promising an elephantmore than a year ago, the Com-mission instead has broughtforth a couple of mice,” Mr. Ro-

sch said.The FTC did win some narrow

concessions from Google, agree-ments the agency described as“landmark” in nature. The com-pany agreed to make voluntarychanges to its search practicesand give online advertisers moreflexibility to manage ad cam-paigns with rival websites.Google also agreed to a settle-

Pleaseturntothenextpage

BY AMIR EFRATIAND BRENT KENDALL

Google Dodges Antitrust HitFTC Extracts Limited Concessions, Clears Web Giant of ‘Search Bias’ After Probe

Investors are jumping out ofmutual funds managed by pro-fessional stock pickers and shift-ing massive amounts of moneyinto lower-cost funds that echothe broader market.

Through November, investorspulled $119.3 billion from so-called actively managed U.S.stock funds in 2012, the biggestyearly outflow since 2008, ac-cording to the latest data fromresearch firm Morningstar Inc.

At the same time, they poured$30.4 billion into U.S. stock ex-change-traded funds. When com-bined with bond ETFs, total in-flows to such funds were $154billion, the largest since 2008.

The move shows growing in-vestor distaste for volatility, asthe dot-com crash in the early2000s, the financial crisis in2008 and recent botched epi-sodes such as last May’s Face-book Inc. initial public offeringhave shaken investor confidence.

It also reflects the fact thatmany money managers of stockfunds, which charge fees but alsodangle the prospect of higher re-turns, have underperformed thebenchmark stock indexes. As aresult, more investors are choos-ing simply to invest in fundstracking the indexes, which carrylower fees and are perceived ashaving less risk.

Mutual-fund experts andfund-firm executives said thetrend likely accelerated in De-cember. Inflows for ETFs in theU.S. totaled $28.1 billion for themonth, up from $20.6 billion inNovember, according to DeborahFuhr, a partner at London-basedETFGI LLP.

The ETF researcher calculatesthat ETF inflows set a record of$187 billion for all 2012, eclips-ing the previous mark of $176billion the firm recorded in

PleaseturntopageA4

BY KIRSTEN GRIND

InvestorsSour onPro StockPickers

BY FARNAZ FASSIHI AND JAY SOLOMON

CALL TO ORDER: John Boehner of Ohio wields the gavel after being reaffirmed as House speaker with nineRepublicans voting against him, a sign of party discord and challenges facing the new Congress. A4

Saul

Loeb/A

genceFrance-Presse/Getty

Images

If You Really Want to DefyConformity, Dress Up Today

i i i

‘Formal Friday’ Suits Those TiredOf Casual Office Wear; Bow Tie, Top Hat

SAN FRANCISCO—The trap-pings of a nonconformist work-place were on display recently atthe headquarters of a startuphere named Pulse: There was thefoosball table, the con-tainers of free M&Ms,the bottle of whiskey ontop of the fridge.

And the guys stand-ing around in suits andties.

It was Friday, afterall, and to truly defyconformity at sometech outfits on that dayof the week, one mustnot wear jeans or flip-flops.

Pulse employees were practic-ing “Formal Friday,” dressing intheir Sunday best. “It is kind offlipped…because we’re super ca-sual the entire week,” says Ak-shay Kothari, co-founder ofPulse, a startup that makes a

news-organizing app. “You wantto break the monotony.”

Many American companieshave come around to practicingCasual Friday, encouraging em-ployees to dress down after fourdays of business wear. Silicon

Valley was a pioneer ofthat basse couture, of-ten opting for casualevery day.

But Casual Fridayjust won’t do any morefor some hip companieshere and in othertrendy cities—now thateverybody’s doing it.

At some tech start-ups, Formal Fridaysstem from employees’desire to free them-

selves from the hoodies andjeans that are standard weekdaydress.

It helps to be able to shocktheir East Coast counterparts.The instigator for Formal Fri-

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Albert Lai

BY ANDY JORDAN

How to Tame an Unruly Caucus: Carry a Big Hammer

Antitrust enforcementcontinues to be cautious......... A2

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