DealBook: New Details Suggest a Defense in SAC Case

At the center of the government’s insider trading case against a former portfolio manager at the hedge fund SAC Capital Advisors is a trade that directly involves Steven A. Cohen, the billionaire owner of the fund.

New details about the case have emerged that could cast doubt on the way that trade has been portrayed by the authorities, suggesting a possible line of defense for the portfolio manager and raising questions about whether the government will be able to build a case against Mr. Cohen, who has long been in the cross hairs of an investigation for insider trading on Wall Street.

Federal prosecutors have claimed that SAC dumped millions of shares of two pharmaceutical companies in 2008 after the former employee, Mathew Martoma, received secret information from a doctor about problems with a new Alzheimer’s drug.

In bringing its charges, the government said that SAC not only sold out of its position, but also bet against — or shorted — the drug companies’ stocks before the public announcement of the bad news. The SAC short position, according to prosecutors, allowed it to earn big profits after shares of the companies, Elan and Wyeth, plummeted.

“The fund didn’t merely avoid losses, it greedily schemed to profit further by shorting Elan and Wyeth stock,” said April Brooks, a senior F.B.I. official in New York, during a press conference on Nov. 20, the day Mr. Martoma was arrested.

Internal SAC trading records, according to people directly involved in the case, indicate that the hedge fund did not have a negative bet in place in advance of the announcement of the drug trial’s disappointing results. Instead, the records indicated that SAC, through a series of trades, including a complex transaction known as an equity swap, had virtually no exposure — neither long nor short — heading into the disclosure of the drug data.

A different narrative surrounding the firm’s trading could help Mr. Martoma, who has pleaded not guilty to securities fraud and conspiracy in what the government calls the most lucrative insider trading case ever charged.

The government, however, does have powerful evidence against Mr. Martoma. Prosecutors say the fund avoided losses by selling its roughly $700 million stake in Elan and Wyeth. If, as the government says, Mr. Martoma caused SAC to sell the shares — and then short them — while possessing important, nonpublic information, that would constitute an insider trading crime. And prosecutors have secured the testimony of the doctor who says he leaked the drug trial data to Mr. Martoma.

Still, perhaps more important, the trading records may complicate a government effort to pursue a case against Mr. Cohen. The SAC founder has not been accused of any wrongdoing, and has said he acted appropriately at all times.

In bringing charges against Mr. Martoma, prosecutors appeared to be circling nearer to Mr. Cohen. The criminal complaint against Mr. Martoma noted that Mr. Cohen had spent 20 minutes on the telephone with the portfolio manager the night before SAC began selling its shares. Prosecutors have not claimed that Mr. Cohen knew that Mr. Martoma had confidential information about the drug trials. (Mr. Martoma has refused so far to cooperate in helping the government build a case against his former boss.)

Yet if the 2008 trade is a possible avenue for the government, it is running out of time to bring a case against Mr. Cohen. Under the statute of limitations for insider trading crimes, the government would have to file a criminal case against him by mid-July. That deadline is the five-year anniversary of the trade in question, unless it could prove a conspiracy with Mr. Martoma that continued well past then.

Prosecutors have not sought to reach a “tolling agreement” with Mr. Cohen, which would allow the government additional time to bring a case past the statute of limitations, according to people briefed on the matter. The S.E.C., meanwhile, is weighing whether to file a civil fraud lawsuit against the fund connected to the drug-stock trades.

All this comes as a Feb. 14 cutoff approaches for SAC clients to ask for their money back. The fund has told employees that it expects at least $1 billion in withdrawals from the $14 billion fund amid the intensifying investigation. SAC has a standard quarterly redemption deadline.

Several other factors could make it difficult for the government to implicate Mr. Cohen. SAC is well known for its aggressive, rapid-fire trading style, and several former employees say that there is nothing unusual about the fund’s exiting a large position over just a few days.

“It’s one thing to bring an insider trading charge against a market novice who pours his 401(k) into a stock after hanging up the phone with an insider,” said Morris J. Fodeman, a former prosecutor and now a white-collar criminal defense lawyer at Wilson Sonsini Goodrich & Rosati. “But it’s far more difficult to make a case against a sophisticated hedge fund that routinely takes large positions and employs complex trading strategies.”

Moreover, both inside and outside SAC, there had been much controversy and debate surrounding the effectiveness of the Alzheimer’s drug, called bapineuzumab, leading up to the July 2008 release of the companies’ clinical results. Mr. Martoma’s colleagues in SAC’s health care group raised specific concerns with Mr. Cohen about the wisdom of holding such a large position in the two companies. And while preliminary data announced by Elan and Wyeth in June offered encouraging news, they also suggested potential problems.

“We believe potentially confounding factors will continue to fuel controversy over bapineuzumab,” wrote Caroline Y. Stewart, a drug stock analyst with Piper Jaffray, reacting to the preliminary results.

On July 11, another Wall Street analyst, Jonathan Aschoff at Brean Murray Carret & Company, raised red flags about a sharp run-up in the price of Elan’s shares heading into the presentation of the data.

“We have numerous concerns with the clinical development of bapineuzumab, and what we viewed to be underwhelming top-line Phase 2 results make us highly doubtful of success,” Mr. Aschoff wrote. “In our opinion, this strategy only serves to increase clinical risk and stoke our pessimism.”

The uncertainty relating to the Alzheimer drug’s clinical results could help explain what led Mr. Cohen to hedge SAC’s position so that it had “neutral exposure,” in Wall Street parlance, heading into disclosure of the trial results.

The short positions that SAC established in Elan and Wyeth were matched almost perfectly to offset an equity swap that effectively provided the fund with exposure to 12 million Wyeth shares, according to the SAC documents. An equity swap mimics ordinary shares and gives investors like hedge funds the benefits of stock ownership without actually owning the shares. Funds often use these complex derivatives to accumulate a large position but not tip off the market.

When government officials announced the case against Mr. Martoma, they made no mention of the swap. Instead, they emphasized how SAC had jettisoned its Elan and Wyeth shares and then brazenly accumulated short positions in both companies.

“The charges unsealed today describe cheating — coming and going,” Preet Bharara, the United States attorney in Manhattan, said in opening remarks during the press conference. “Specifically, insider trading first on the long side, and then on the short side.”

The government noted the swap position in its court papers, but did not factor it into SAC’s overall gains and losses in Elan and Wyeth. Because SAC did not trade the Wyeth swap, instead leaving the position in place, it could not be part of any insider trading charge.

Representatives for the United States attorney’s office and the S.E.C. declined to comment. An SAC spokesman declined to comment, as did Charles A. Stillman, the lawyer for Mr. Martoma.

Prosecutors have built their case against Mr. Martoma by securing the cooperation of Dr. Sidney Gilman, a neurology professor who ostensibly leaked to him the confidential data about the drug being jointly developed by Elan and Wyeth. The companies hired Dr. Gilman to oversee the clinical trials. SAC paid Dr. Gilman about $108,000 as a consultant.

The government said that Mr. Cohen’s fund accumulated a roughly $700 million combined stake in Elan and Wyeth based on Mr. Martoma’s recommendation. SAC’s equity swap with respect to Wyeth, however, added $566 million in exposure.

On Thursday, July 17, 2008, as the drug trials neared completion, Dr. Gilman told Mr. Martoma that patients were experiencing serious side effects, the government said. Three days later, on a Sunday, with the markets closed, Mr. Martoma had the 20-minute conversation with Mr. Cohen, according to telephone records cited in the criminal complaint. Prosecutors said that Mr. Martoma told his boss that he was no longer “comfortable” with the investments.

On Monday morning, July 21, at Mr. Cohen’s direction, SAC’s head trader began selling the fund’s 10.5 million shares of Elan and 7.1 million shares of Wyeth. By July 29 — the day that the companies announced the trial results — SAC had not only sold out of its Elan and Wyeth holdings but also established short positions in the stocks. SAC was short about 4.5 million shares of Elan and 3.3 million shares of Wyeth. The fund also purchased a small number of Elan put options, a bet that the company’s shares would decline.

The 12 million-share equity swap position in Wyeth, however, counterbalanced the short exposure. SAC was short 4.5 million shares of Elan but, taking the swap into account, effectively long about 8.7 million shares of Wyeth. On July 30, the first trading day after the companies disclosed the negative trial results, Elan’s stock fell about 42 percent and Wyeth’s stock dropped about 12 percent.

Federal prosecutors said that SAC’s trading ahead of the announcement allowed the fund to avoid $194 million in losses by exiting the Elan and Wyeth positions, and then also earn about $83 million on the short trades. But SAC also had paper losses of about $70 million on its Wyeth swap, almost entirely negating any gains from the short sales.

While such details would seem to contradict how authorities have described the trading, prosecutors could argue that SAC had little choice but to leave the swaps in place, and that was part of the strategy to trade on inside information. That is because selling a swap would be difficult to do without attracting attention in the marketplace. If SAC had sold its swaps, it would have had to notify the Wall Street bank that it entered into the swap transaction with and, in turn, the bank’s trader would have most likely sold the shares on the open market.

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Lady Malcolm Douglas-Hamilton Dies at 103; Aided Britain in War

Wide World Photos

Lady Malcolm Douglas-Hamilton, then Natalie Latham, in 1941. She started Bundles for Britain.

In 1939, Lady Malcolm Douglas-Hamilton, who died on Jan. 14 at 103, had neither that title nor that name. She was Natalie Latham, a fixture of Manhattan society whose beauty drew notice in Vogue magazine. She had achieved a dollop of fame when she and her two young daughters, nicknamed Mimi and Bubbles, appeared together in matching swimwear in a Life magazine photo spread, having captivated a photographer at a beach club one day.

Mrs. Latham, deft with a needle and thread, had made the outfits herself.

At the time, England had declared war on Germany, whose navy was attacking British ships. It was then, already twice divorced at 30, that Mrs. Latham paused to take stock of her life. A former debutante, she had family wealth, a Revolutionary War pedigree and an Upper East Side address. She was busy enough, organizing charity balls, herding two rambunctious children about town and making her own clothes. Like most Americans, she did not want the United States to join the war, but she felt private citizens ought to help somehow.

“I had never had time to think before,” she said in an interview with The New Yorker in 1941. “I began to think of Britain.”

It was a turning point in a life of privilege that led to one of the 20th century’s most inspired relief efforts. Nearly two years before the United States entered World War II, Mrs. Latham started Bundles for Britain, an organization that initially consisted of a few New York women knitting socks and caps for British sailors. It would grow to embrace 1.5 million volunteers in 1,900 branches in every state in the union and begin shipping to Britain not only hundreds of thousands of knitted items but also ambulances, X-ray machines and children’s cots — all labeled “From your American friends.”

Manhattan society matrons pitched in, along with sheepherders in Oregon, apple growers in Michigan and Indian blanket makers in Oklahoma. South Carolinians raised money with a watermelon-eating contest. Women everywhere baked cakes and took in laundry to buy yarn.

Letters of thanks poured in (“Dear Bundles,” most said), so Mrs. Latham sought help in replying to them, recruiting eight women, all former debutantes, at the Stork Club, one of her favorite haunts. For help on the English end, she enlisted Janet Murrow, wife of the legendary CBS reporter Edward R. Murrow, whose live radio broadcasts from London brought the war home to Americans; Louise Carnegie, wife of the industrialist Andrew Carnegie; and Clementine Churchill, wife of the prime minister. (Mrs. Churchill sent wish lists back to New York.)

Joan Crawford asked her fans to forgo giving her holiday presents and contribute instead to Bundles. For a raffle, Queen Elizabeth the Queen Mother, mother of the current queen, donated a bejeweled cigarette case in red (rubies), white (diamonds) and blue (sapphires), as well as a piece of shrapnel from the bomb that had hit Buckingham Palace.

“It’s like a fairy tale,” Mrs. Latham told The New Yorker. “I just go around pinching myself, it’s so thrilling.”

It was also exhausting: she sometimes collapsed at her desk with fatigue. King George VI made her an honorary Commander of the British Empire, the first non-British woman to be so honored.

She died at a nursing home in Andover, N.J., her family said. After living for many years on the Upper East Side, she had retired to Stillwater, N.J.

Bundles for Britain, which continued through the war, was but one milestone in the life of Lady Malcolm Douglas-Hamilton. At the request of the White House, she created a spinoff group, Bundles for America, to aid Americans in need during the war; one project involved scavenging junkyards for upholstery to make into clothing.

In 1947 she founded and became president of Common Cause (not to be confused with the liberal government watchdog group started in 1970), a moderate anti-Communist organization whose leaders included the historian Arthur M. Schlesinger Jr. She formed a group to aid Haiti; another to stem erosion of the nation’s morals; and still another to encourage good taste. (That group built the House of Good Taste at the 1964 World’s Fair in New York.)

In the mid-1940s she worked for The New York Times Company as a liaison to women’s groups.

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5 Fascinating Facts We Learned From Reddit This Week

Click here to view the gallery: Reddit Facts 2/2

If you’ve ever wanted to learn how to game the French lottery of 1728 (and who hasn’t, amirite?), you’ve come to the right place. This week’s edition of Reddit Facts has some delightful tidbits about the Fab Four, a famous photograph and a funky fruit.

[More from Mashable: 10 Quirky Etsy Finds to Celebrate Groundhog Day]

Homepage image courtesy of Wikimedia Commons.

[More from Mashable: 10 Valentine’s Day Gifts for the Special Geek in Your Life]

This story originally published on Mashable here.

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Stevie Wonder headlines pre-Super Bowl concert

NEW ORLEANS (AP) — Applause and approval greeted Stevie Wonder as thousands stood for hours to hear his pre-Super Bowl concert that also featured guitarist Gary Clark Jr.

Escorted on stage late Saturday by his daughter and backup singer Aisha Morris, Wonder performed several of his hits, including his opening song, "How Sweet It Is (To Be Loved By You)."

That was followed by "Master Blaster," Michael Jackson's "The Way You Make Me Feel," and Wonder's own "Higher Ground."

The 62-year-old Rock and Roll Hall of Fame member headlined the event outdoor event held near the Wyndham Riverfront Hotel on the eve of Sunday's game between the Baltimore Ravens and the San Francisco 49ers.

Thousands packed a tent set up on a parking lot across the street from the hotel to hear Wonder, Clark, R&B artist Janelle Monae and DJ Martin Solveig.

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Iceland, Prosecutor of Bankers, Sees Meager Returns

Ilvy Njiokiktjien for The New York Times

"Greed is not a crime. But the question is: where does greed lead?" said Olafur Hauksson, a special prosecutor in Reykjavik.

REYKJAVIK, Iceland — As chief of police in a tiny fishing town for 11 years, Olafur Hauksson developed what he thought was a basic understanding of the criminal mind. The typical lawbreaker, he said, recalling his many encounters with small-time criminals, “clearly knows that he crossed the line” and generally sees “the difference between right and wrong.”

Today, the burly, 48-year-old former policeman is struggling with a very different sort of suspect. Reassigned to Reykjavik, the Icelandic capital, to lead what has become one of the world’s most sweeping investigation into the bankers whose actions contributed to the global financial crisis in 2008, Mr. Hauksson now faces suspects who “are not aware of when they crossed the line” and “defend their actions every step of the way.”

With the global economy still struggling to recover from the financial maelstrom five years ago, governments around the world have been criticized for largely failing to punish the bankers who were responsible for the calamity. But even here in Iceland, a country of just 320,000 that has gone after financiers with far more vigor than the United States and other countries hit by the crisis, obtaining criminal convictions has proved devilishly difficult.

Public hostility toward bankers is so strong in Iceland that “it is easier to say you are dealing drugs than to say you’re a banker,” said Thorvaldur Sigurjonsson, the former head of trading for Kaupthing, a once high-flying bank that crumbled. He has been called in for questioning by Mr. Hauksson’s office but has not been charged with any wrongdoing.

Yet, in the four years since the Icelandic Parliament passed a law ordering the appointment of an unnamed special prosecutor to investigate those blamed for the country’s spectacular meltdown in 2008, only a handful of bankers have been convicted.

Ministers in a left-leaning coalition government elected after the crash agree that the wheels of justice have ground slowly, but they call for patience, explaining that the process must follow the law, not vengeful passions.

“We are not going after people just to satisfy public anger,” said Steingrimur J. Sigfusson, Iceland’s minister of industry, a former finance minister and leader of the Left-Green Movement that is part of the governing coalition.

Hordur Torfa, a popular singer-songwriter who helped organize protests that forced the previous conservative government to resign, acknowledged that “people are getting impatient” but said they needed to accept that “this is not the French Revolution. I don’t believe in taking bankers out and hanging them or shooting them.”

Others are less patient. “The whole process is far too slow,” said Thorarinn Einarsson, a left-wing activist. “It only shows that ‘banksters’ can get away with doing whatever they want.”

Mr. Hauksson, the special prosecutor, said he was frustrated by the slow pace but thought it vital that his office scrupulously follow legal procedure. “Revenge is not something we want as our main driver in this process. Our work must be proper today and be seen as proper in the future,” he said.

Part of the difficulty in prosecuting bankers, he said, is that the law is often unclear on what constitutes a criminal offense in high finance. “Greed is not a crime,” he noted. “But the question is: where does greed lead?”

Mr. Hauksson said it was often easy to show that bankers violated their own internal rules for lending and other activities, but “as in all cases involving theft or fraud, the most difficult thing is proving intent.”

And there are the bankers themselves. Those who have been brought in for questioning often bristle at being asked to account for their actions. “They are not used to being questioned. These people are not used to finding themselves in this situation,” Mr. Hauksson said. They also hire expensive lawyers.

The special prosecutor’s office initially had only five staff members but now has more than 100 investigators, lawyers and financial experts, and it has relocated to a big new office. It has opened about 100 cases, with more than 120 people now under investigation for possible crimes relating to an Icelandic financial sector that grew so big it dwarfed the rest of the economy.

To help ease Mr. Hauksson’s task, legislators amended the law to allow investigators easy access to confidential bank information, something that previously required a court order.

Parliament also voted to put the country’s prime minister at the time of the banking debacle on trial for negligence before a special tribunal. (A proposal to try his cabinet failed.) Mr. Hauksson was not involved in the case against the former leader, Geir H. Haarde, who last year was found guilty of failing to keep ministers properly informed about the 2008 crisis but was acquitted on more serious charges that could have resulted in a prison sentence.

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Taliban Assault in Pakistan Results in Deaths of 35

PESHAWAR — Taliban militants killed at least nine soldiers and four paramilitary troops in an attack on a Pakistani army base in northwestern Pakistan early Saturday, officials said. Ten civilians, including three women and three children who were living in a nearby compound, were also killed.

The brazen assault took place in the restive Khyber-Pakhtunkhwa province and comes just a day after a suicide bombing near a mosque in another northwestern town, Hangu, killed at least 26 people.

A spokesman for Tehrik-e-Taliban Pakistan, commonly known as the Pakistani Taliban, claimed responsibility and said it was to avenge the death of two Taliban commanders who were killed in U.S drone strikes.

According to initial details, Taliban militants, armed with heavy machine guns, fired rockets in the pre-dawn assault at the base in Serai Norang in the Lakki Marwat district, setting off a heavy gun battle that lasted for several hours.

A Pakistani army official, speaking on condition of anonymity, said that 12 militants were killed in the assault.

“Bodies of four terrorists, out of which two were wearing suicide jackets, are in custody of security forces,” the official said.

Eighteen security forces officials were wounded in the attack and were sent for treatment to a military hospital in Peshawar, the provincial capital.

During the attack, one of the suicide bombers entered a house near the camp and detonated his explosives, killing the women and children, the official said.

Pakistani officials described the base as “an isolated camp,” and one of the three bases set up two years ago to wrest Lakki Marwat from the control of Taliban militants.

The ferocity of the attack, which appeared well planned and coordinated, took security officials by surprise, and they speculated that the attackers came from neighboring lawless semi-autonomous tribal regions, where the government has traditionally had little sway.

“We are trying to piece evidence,” a security official said.

Ihsanullah Ihsan, the Taliban spokesman, who said in a telephone interview the attack was in retaliation to the killing of two Taliban commanders, identified one of the commanders as Wali Muhammad, also known as Toofani Mehsud. He was killed in an American drone strike on Jan. 6 in the tribal region of South Waziristan, and was known as a trainer of suicide bombers.

The country’s lawless tribal regions have been a safe haven for local and foreign militants and as a result have been a frequent target of American drone strikes, which are deeply unpopular in the country. Pakistan’s parliament has repeatedly demanded an end to drone strikes, although Pakistani officials privately acknowledge the effectiveness of the such attacks in killing militants.

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Nintendo says it won’t cut Wii U price despite slumping sales

Nintendo (NTDOY) has a lot riding on its latest video game console, but sales have been slow thus far. Gamers have not responded to the bulky new GamePad controller, which could be considered the biggest point of differentiation on the Wii U. As a result, Nintendo recently slashed its sales outlook on Wii U consoles for the March quarter. Following some speculation that Nintendo might cut the price of the Wii U in an effort to bolster sales, the company confirmed alongside its third-quarter results that dropping the console’s price is not an option.

[More from BGR: BlackBerry doesn’t need to catch up with Android and iOS overnight, it needs to live to fight another day]

“With Wii U, we have taken a rather resolute stance in pricing it below its manufacturing cost, so we are not planning to perform a markdown,” the company said. “I would like to make this point absolutely clear. We are putting our lessons from Nintendo 3DS to good use, as I have already publicly stated. However, given that it has now become clear that we have not yet fully communicated the value of our product, we will try to do so before the software lineup is enhanced and at the same time work to enrich the software lineup which could make consumers understand the appeal of Wii U.”

[More from BGR: Mark Cuban unloads on American patent system, says bad patents are ‘crushing small businesses’]

Nintendo stands firm behind its new console, and the company says it will gain traction once consumers become more familiar with the new GamePad controller and other Wii U features.

This article was originally published on BGR.com

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Washington wins 3 trophies at NAACP Image Awards

LOS ANGELES (AP) — Kerry Washington was a triple threat at the NAACP Image Awards.

The star of ABC's "Scandal" picked up a trio of trophies at the 44th annual ceremony: outstanding actress in a drama series for "Scandal," supporting actress in a motion picture for "Django Unchained" and the President's Award, which is given in recognition of special achievement and exceptional public service.

"This award does not belong to me," said Washington, who plays a slave separated from her husband in "Django Unchained," as she picked up her first trophy of the evening for her role in the film directed by Quentin Tarantino. "It belongs to our ancestors. We shot this film on a slave plantation, and they were with us along every step of the way."

Washington, who plays crisis management consultant Olivia Pope on "Scandal," serves on President Barack Obama's Committee on the Arts and the Humanities.

Don Cheedle was awarded the outstanding actor in a comedy series trophy for his role as a slick management consultant in Showtime's "House of Lies."

"This doesn't belong just to me, but I am taking it home tonight," joked Cheedle.

A few winners weren't present at the Shrine Auditorium to pick up their trophies, including Denzel Washington for outstanding actor in a motion picture for "Flight," Viola Davis for outstanding actress in a motion picture for "Won't Back Down" and Omar Epps for supporting actor in a drama series for Fox's "House."

"Red Tails," the drama about the Tuskegee Airmen, was honored as outstanding motion picture.

"Look! I beat Quentin Tarantino," beamed "Red Tails" executive producer George Lucas as he accepted the award.

LL Cool J, who was honored as outstanding actor in a drama series for CBS' "NCIS: Los Angeles," dedicated his trophy to fellow nominee Michael Clarke Duncan, "The Green Mile" and "The Finder" actor who died last year.

"I wish his family well," said LL. "Let's give it up for him."

Gladys Knight sang during the in memoriam segment, but the beginning of her performance wasn't heard on the live NBC broadcast because of a technical glitch.

Sidney Poitier presented Harry Belafonte with the Spingarn Award, which honors outstanding achievement by an African American. His honor was followed by a serenade from Wyclef Jean and Common.

Other winners at the ceremony hosted by talk show host Steve Harvey included Loretta Devine as supporting actress in a drama series for "Grey's Anatomy," Cassi Davis as outstanding actress in a comedy series and Lance Gross as outstanding supporting actor in a comedy series for TBS' "Tyler Perry's House of Payne."

The Image Awards are presented annually by the National Association for the Advancement of Colored People, and the group's members select the winners.

___

Online:

http://www.naacpimageawards.net

___

Follow AP Entertainment Writer Derrik J. Lang on Twitter at http://www.twitter.com/derrikjlang

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Ferrol Sams, Doctor Turned Novelist, Dies at 90

Ferrol Sams, a country doctor who started writing fiction in his late 50s and went on to win critical praise and a devoted readership for his humorous and perceptive novels and stories that drew on his medical practice and his rural Southern roots, died on Tuesday at his home in Lafayette, Ga. He was 90.

The cause, said his son Ferrol Sams III, also a doctor, was that he was “slap wore out.”

“He lived a full life,” his son said. “He didn’t leave anything in the tank.”

Dr. Sams grew up on a farm in the rural Piedmont area of Georgia, seven mud-road miles from the nearest town. He was a boy during the Depression; books meant escape and discovery. He read “Robinson Crusoe,” then Mark Twain and Charles Dickens. One of his English professors at Mercer University, in Macon, suggested he consider a career in writing, but he chose another route to examining the human condition: medical school.

When he was 58 — after he had served in World War II, started a medical practice with his wife, raised his four children and stopped devoting so much of his mornings to preparing lessons for Sunday school at the Methodist church — he began writing “Run With the Horsemen,” a novel based on his youth. It was published in 1982.

“In the beginning was the land,” the book begins. “Shortly thereafter was the father.”

In The New York Times Book Review, the novelist Robert Miner wrote, “Mr. Sams’s approach to his hero’s experiences is nicely signaled in these two opening sentences.”

He added: “I couldn’t help associating the gentility, good-humored common sense and pace of this novel with my image of a country doctor spinning yarns. The writing is elegant, reflective and amused. Mr. Sams is a storyteller sure of his audience, in no particular hurry, and gifted with perfect timing.”

Dr. Sams modeled the lead character in “Run With the Horsemen,” Porter Osborne Jr., on himself, and featured him in two more novels, “The Whisper of the River” and “When All the World Was Young,” which followed him into World War II.

Dr. Sams also wrote thinly disguised stories about his life as a physician. In “Epiphany,” he captures the friendship that develops between a literary-minded doctor frustrated by bureaucracy and a patient angry over past racism and injustice.

Ferrol Sams Jr. was born Sept. 26, 1922, in Woolsey, Ga. He received a bachelor’s degree from Mercer in 1942 and his medical degree from Emory University in 1949. In his addition to his namesake, survivors include his wife, Dr. Helen Fletcher Sams; his sons Jim and Fletcher; a daughter, Ellen Nichol; eight grandchildren; and nine great-grandchildren.

Some critics tired of what they called the “folksiness” in Dr. Sams’s books. But he did not write for the critics, he said. In an interview with the Georgia Writers Hall of Fame, Dr. Sams was asked what audience he wrote for. Himself, he said.

“If you lose your sense of awe, or if you lose your sense of the ridiculous, you’ve fallen into a terrible pit,” he added. “The only thing that’s worse is never to have had either.”

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Media Decoder Blog: In Wake of Restructuring, NBC News President Quits

8:30 p.m. | Updated

The longest-serving president of any of the three network news divisions, Steve Capus of NBC News, stepped down from his position on Friday, six months after Comcast restructured its news units in a way that diminished his authority.

Pat Fili-Krushel, chairwoman of the NBCUniversal News Group, said in a brief telephone interview on Friday that she would “cast a wide net” while searching for a successor to Mr. Capus. In the interim, the leaders of the news division will report directly to her.

Ms. Fili-Krushel became Mr. Capus’s boss last July when Steve Burke, the chief executive of NBCUniversal, consolidated all of NBC’s news units — NBC News, the cable news channels MSNBC and CNBC, and its stake in the Weather Channel — under a new umbrella, the NBCUniversal News Group. Mr. Burke asked Ms. Fili-Krushel, one of his most trusted lieutenants, to run it, while keeping Mr. Capus and the heads of the other units in place.

Ms. Fili-Krushel worked early in her career at HBO and Lifetime. A veteran of the Walt Disney Company, where she helped program ABC, and  Time Warner, where she was an administrator, she is by her own admission not a journalist.  But now she is, by default, the highest-ranking woman in the American television news industry — not just at the moment, but in the history of the medium. The heads of the news divisions at ABC and CBS are men, as are the heads of the Fox News Channel, CNN, and Bloomberg.

Ms. Fili-Krushel has kept a low public profile, but has been a forceful presence behind the scenes, recently moving from her office on the 51st floor of 30 Rockefeller Center, near Mr. Burke’s, to a new one on the third floor, where NBC News is based. On Friday, she said she had spent her first six months “learning, listening and getting to know the players here.” She called the News Group an “unbelievably strong organization.”

Though Mr. Capus’s exit saddened many at NBC News on Friday, it came as little surprise. He had previously reported directly to Mr. Burke, but after the restructuring he reported to Ms. Fili-Krushel, and he made no secret of his unhappiness with the change. His contract had a clause that allowed him to leave in the event that he no longer reported to Mr. Burke, according to two people with direct knowledge of the arrangement at NBC, and he decided to exercise that right after months of contemplation. The people insisted on anonymity because they were not authorized by the network to speak publicly.

Mr. Capus told Ms. Fili-Krushel of his intent to leave last Friday. It is likely that he would have left sooner, but a series of major news stories kept him busy late last year — including Hurricane Sandy, the presidential election and the school shooting in Newtown, Conn. Mr. Capus also oversaw the network’s response to the kidnapping of Richard Engel and an NBC News crew in Syria last month.

“It has been a privilege to have spent two decades here, but it is now time to head in a new direction,” he wrote in an e-mail to staff members on Friday afternoon.

Mr. Capus guided NBC through a revolutionary time in news-gathering and distribution. He maintained the news division’s profitability, managed tensions between NBC News and its increasingly liberal cable channel MSNBC, and fostered new business ventures like an in-house production company and an annual education summit. Last year, he unwound an old deal with Microsoft to give the news division complete control over its Web site, now named NBCNews.com, for the first time.

Ms. Fili-Krushel wrote in a separate e-mail to staff members that “NBC News is America’s leading source of television news and Steve has been a big part of that success.”

NBC News is the producer of the most popular evening newscast in the country. But its single biggest source of profits, the morning show “Today,” fell to second place last year, behind ABC’s “Good Morning America,” for the first time since the 1990s. The decline caused widespread anxiety inside the news division and speculation that Mr. Capus would be relieved of his duties.

Inside NBC, both Mr. Capus and the executive producer of “Today,” Jim Bell, received much of the blame for the botched removal of Ann Curry from “Today” last June, which worsened the show’s already tenuous position in the ratings. Ms. Fili-Krushel was put in charge just a few weeks later.

Mr. Bell was replaced at “Today” last fall and is now the executive producer for NBC Olympics. Savannah Guthrie is now the co-host of “Today,” and Ms. Curry is a national and international correspondent for the network, but is rarely seen. Mr. Capus’s exit was seen by some at the network as the last shoe that had to drop.

In his e-mail to staff members, Mr. Capus called it an “extremely difficult decision to walk away,” noting that he started at NBC as a producer 20 years ago this month. He did not make any mention of what he would do next. “Journalism is, indeed, a noble calling, and I have much I hope to accomplish in the next phase of my career,” he wrote.

“Today” continues to lose to ABC’s “Good Morning America” among total viewers, but lately it has won a few weeks in the 25- to 54-year-old demographic that advertisers covet.

“NBC Nightly News” has more successfully fended off ABC’s “World News,” despite an aggressive push by ABC. Mr. Capus said, “NBC News has grown in all key metrics — from ratings and reputation to profitability.”

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