A Retailer, Eileen Fisher, Shakes Off Storm’s Impact to Reopen

Richard Perry/The New York Times

For Eileen Fisher, the storm was the biggest blow to her company's operations since she opened it in 1984.

IRVINGTON, N.Y. — Eileen Fisher had no time to spare. For her clothing stores to be up and running for Thanksgiving weekend, and her many retail clients stocked for the holiday rush, her company’s response to Hurricane Sandy would need to be close to flawless.

Eileen Fisher

The flooding from Hurricane Sandy decimated an Eileen Fisher store in Irvington, N.Y., and forced the company to close its headquarters there.

And it was.

All but one of the company’s 58 stores are open, and retailers like Nordstrom and Bloomingdale’s have Ms. Fisher’s latest designs on their racks. On a recent afternoon, aside from its cramped quarters, there was no sign of the storm on the second floor of the Eileen Fisher headquarters here, 20 miles north of Manhattan. Phones were ringing, online orders were being processed and Ms. Fisher was at her desk.

But step downstairs, where work crews were sawing off the bottom part of walls, removing mold-ridden desks and pulling up drenched carpet, and the magnitude of the last month’s miracle was hard to dismiss.

“It was a mess,” Ms. Fisher said. “I couldn’t believe it.”

Hurricane Sandy hurt retailers large and small. It closed airports, ports and roads, jamming merchandise at critical shipping times. More than a third of stores in the Northeast closed for at least a day, according to the research firm RetailNext. Macy’s has said that the storm delayed sales. Target said November started off choppily, and a Kohl’s store in Brooklyn will be closed at least through January.

For Eileen Fisher, started by Ms. Fisher in 1984, the storm was the biggest blow to operations ever. It decimated a store here and closed her headquarters, her Manhattan design center and her warehouse in Secaucus, N.J. For smaller retailers — Eileen Fisher expects about $350 million in revenue this year — a week or two of closed offices, stores and warehouses in early November could be ruinous.

Recovery was both an urgent and daunting task. A broad insurance policy helped a lot. So did some planning and a good amount of luck. As did an almost out-of-body detachment on executives’ parts to see past the emotion of sewage-soaked shirts and stained rolls of fabric to the prize of reopening a ravaged business.

Even the cash in the register at the Irvington store had to be taken home and blown dry. Almost $1.5 million, 12 Dumpsters and eight moving-truck-size mobile storage units of damaged goods later, Eileen Fisher was — for the most part — back.

“It was just stuff,” Ms. Fisher said.

Perils of a New Location

Ms. Fisher moved her headquarters to Irvington 20 years ago, choosing a brick building that was just a couple of yards from the Hudson River. It reminded her of the TriBeCa location where she had started the business, she said, and who doesn’t get inspiration from water?

Now that inspiration had become a liability. On a recent sunny day, the Hudson seemed calm and threatless, a cool gray-brown river about 10 feet below its banks. But on the night of the storm, the river rose over a barrier and stampeded north, churning through buildings “like a washing machine,” said Peter Joslin, the company’s facilities manager.

Mr. Joslin is from the Midwest, and he’s seen his fair share of river flooding, including last year, when a corner of the building took on water during Hurricane Irene. In the week before Sandy hit on Monday, Oct. 29, he was watching the weather forecasts, but, as he says, “we’re pretty laid back down here.”

Then, on the Friday before the storm, he received an e-mail from his predecessor in the job. It contained just four words: “Get out them sandbags.”

“That started to freak me out,” Mr. Joslin said.

He called the owner of a remediation company that had done work for Eileen Fisher in the past and obtained a promise that if anything went wrong, the company would be on site within two hours. He then called a moving company to see if it could remove some important files and other valuables, like $20,000 copiers. The moving company was already booked.

Employees worked through the weekend, piling sandbags three high along the building, encasing the second floor of headquarters in plastic in case the roof leaked and caulking windows. The storm struck Monday night.

Assessing the Damage

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Feds charge former hedge fund manager in big insider-trading case

WASHINGTON -- Federal prosecutors on Tuesday charged a former hedge fund portfolio manager with securities fraud in connection with what they said was the most lucrative insider-trading case ever prosecuted.

In complaints filed in New York, authorities said investment advisors and hedge funds made more than $276 million in illegal profits or avoided losses by trading before the announcement in 2008 of negative results from clinical trials for an Alzheimer's disease drug being developed by Elan Corp. and Wyeth.

Prosecutors charged Mathew Martoma, a former portfolio manager at CR Intrinsic, an unregistered investment adviser, with securities fraud for allegedly illegally using information about the clinical trial results that he obtained from a neurologist at a hospital involved in the testing.

The criminal complaint did not name the neurologist, which it said was a cooperating witness in the case.

The Securities and Exchange Commission filed a a related civil suit Tuesday against Martoma, CR Intrinsic and Dr. Sidney Gilman, a neurology professor at the University of Michigan Medical School. The SEC suit said Gilman was chairman of the safety monitoring committee overseeing the clinical trials of the Alzheimer's drug.

Martoma met Gilman some time between 2006 and 2008 through paid consultations, the SEC complaint says. "During these consultations, Gilman provided Martoma with material, nonpublic information about the ongoing trial," the SEC complaint said.

In mid-July 2008, "Gilman provided Martoma with the actual, detailed results of the clinical trial" before an official announcement on July 29, 2008, the SEC said.

The FBI, SEC and U.S. attorney's office in New York scheduled a 12:30 p.m. EST news conference to discuss the case.

"The charges unsealed today describe cheating coming and going – specifically, insider trading first on the long side, and then on the short side, on a scale that has no historical precedent," said Preet Bharara, U.S. attorney for Manhattan.  "As alleged, by cultivating and corrupting a doctor with access to secret drug data, Mathew Martoma and his hedge fund benefited from what might be the most lucrative inside tip of all time."

Follow Jim Puzzanghera on Twitter and Google+.

Also:

Senate moves insider trading bill to Obama's desk.

Baseball star Eddie Murray settles insider-trading investigation.

Former Goldman Sachs director Rajat Gupta guilty of insider trading.

http://articles.latimes.com/2012/aug/17/business/la-fi-sec-murray-20120818

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Hacker Found Guilty of Breaching AT&T Site to Obtain iPad Customer Data

A hacker charged with federal crimes for obtaining the personal data of more than 100,000 iPad owners from AT&T’s website was found guilty on Tuesday.

Andrew Auernheimer, 26, of Fayetteville, Arkansas, was found guilty in federal court in New Jersey of one count of identity fraud and one count of conspiracy to access a computer without authorization.

The jury reached its verdict just hours after being sequestered.

Auernheimer tweeted to supporters that he expected the verdict and planned to appeal.

Auernheimer and Daniel Spitler, 26, of San Francisco, California, were charged last year after the two discovered a hole in AT&T’s website in 2010 that allowed anyone to obtain the e-mail address and ICC-ID of iPad users. The ICC-ID is a unique identifier that’s used to authenticate the SIM card in a customer’s iPad to AT&T’s network.

The iPad was released by Apple in April 2010. AT&T provided internet access for some iPad owners through its 3G wireless network, but customers had to provide AT&T with personal data when opening their accounts, including their e-mail address. AT&T linked the user’s e-mail address to the ICC-ID, and each time the user accessed the AT&T website, the site recognized the ICC-ID and displayed the user’s e-mail address.

Auernheimer and Spitler discovered that the site would leak e-mail addresses to anyone who provided it with a ICC-ID. So the two wrote a script – which they dubbed the “iPad 3G Account Slurper” — to mimic the behavior of numerous iPads contacting the web site in order to harvest the e-mail addresses of iPad users.

According to authorities, they obtained the ICC-ID and e-mail address for about 120,000 iPad users, including dozens of elite iPad early adopters such as New York Mayor Michael Bloomberg, then-White House Chief of Staff Rahm Emanuel, anchorwoman Diane Sawyer of ABC News, New York Times CEO Janet Robinson and Col. William Eldredge, commander of the 28th Operations Group at Ellsworth Air Force Base in South Dakota, as well as dozens of people at NASA, the Justice Department, the Defense Department, the Department of Homeland Security and other government offices.

The two contacted the Gawker website to report the hole, a practice often followed by security researchers to call public attention to security holes that affect the public, and provided the website with harvested data as proof of the vulnerability. Gawker reported at the time that the vulnerability was discovered by a group calling itself Goatse Security.

AT&T maintained that the two did not contact it directly about the vulnerability and learned about the problem only from a “business customer.”

Auernheimer later sent an e-mail to the U.S. attorney’s office in New Jersey, blaming AT&T for exposing customer data, authorities say.

“AT&T needs to be held accountable for their insecure infrastructure as a public utility and we must defend the rights of consumers, over the rights of shareholders,” he wrote, according to prosecutors. ”I advise you to discuss this matter with your family, your friends, victims of crimes you have prosecuted, and your teachers for they are the people who would have been harmed had AT&T been allowed to silently bury their negligent endangerment of United States infrastructure.”

But prosecutors say his interest went beyond concern about the security of customer data.

According to the criminal complaint, a confidential informant helped federal authorities make their case against the two defendants by providing them with 150 pages of chat logs from an IRC channel where, prosecutors said, Spitler and Auernheimer admitted conducting the breach to tarnish AT&T’s reputation and promote themselves and Goatse Security.

Spitler: I just harvested 197 email addresses of iPad 3G subscribers there should be many more … weev: did you see my new project?

Auernheimer: no

Spitler: I’m stepping through iPad SIM ICCIDs to harvest email addresses if you use someones ICCID on the ipad service site it gives you their address

Auernheimer: loooool thats hilarious HILARIOUS oh man now this is big media news … is it scriptable? arent there SIM that spoof iccid?

Spitler: I wrote a script to generate valid iccids and it loads the site and pulls an email

Auernheimer: this could be like, a future massive phishing operation serious like this is valuable data we have a list a potential complete list of AT&T iphone subscriber emails

…

Spitler: I hit fucking oil

Auernheimer: loooool nice

Spitler: If I can get a couple thousand out of this set where can we drop this for max lols?

Auernheimer: dunno i would collect as much data as possible the minute its dropped, itll be fixed BUT valleywag i have all the gawker media people on my facecrook friends after goin to a gawker party

At one point the two discussed the legal risks of what they were doing:

Spitler: sry dunno how legal this is or if they could sue for damages

Auernheimer: absolutely may be legal risk yeah, mostly civil you absolutely could get sued to fuck

At the same time, others on the IRC chat allegedly discussed the possibility of shorting AT&T’s stock.

Pynchon: hey, just an idea delay this outing for a couple days tommorrow short some at&t stock then out them on tuesday then fill your short and profit

Rucas: LOL

Auernheimer: well i will say this it would be against the law … for ME to short the att stock but if you want to do it go nuts

Spitler: I dont have any money to invest in ATT

…

Auernheimer: if you short ATT dont let me know about it

Spitler: IM TAKIN YOU ALL DOWN WITH ME SNITCH HIGH EVERYDAY

In the wake of news stories about the breach, they allegedly discussed their failure to report the vulnerability to a “full disclosure” mailing list, as well as the opportunity to push their Goetse Security business as a result of the breach:

Nstyr: you should’ve uploaded the list to full disclosure maybe you still can

Auernheimer: no no that is potentially criminal at this point we won

Nstyr: ah

Auernheimer: we dropepd the stock price

Auernheimer: lets not like do anything else we fucking win and i get to like spin us as a legitimate security organization

Spitler pleaded guilty to the charges last year.

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“Secret Disco Revolution” Gets U.S. Release

LOS ANGELES (TheWrap.com) – Screen Media Films has acquired U.S. theatrical rights to the documentary “Secret Disco Revolution,” featuring interviews with many 70′s music icons, including Gloria Gaynor, The Village People, and Kool and the Gang.

ScreenMedia plans a June 2013 U.S. theatrical run of the documentary, the company announced Monday.

Written, directed, and produced by Kastner, the film looks into the disco movement and many of its key figures.

“For anyone that grew up with disco this film will transport you back in time while filling in the blanks to what you didn’t even realize was happening around you,” said Suzanne Blech, president of Screen Media Films.

“If you weren’t around at the time to get caught up in the disco craze, the music and the moves will make you want to get up and dance,” Blech said.

Entertainment One Films International (eOne) has also sold the film to a number of other territories, including Japan (Kadokawa), Italy (Sky Arts) and Germany, Austria, Switzerland and France, all through ZDF Arte.

The Screen Media deal was negotiated by Blech and Charlotte Mickie from eOne, along with Andrew Herwitz from The Film Sales Company, on behalf of the filmmakers.

Music News Headlines – Yahoo! News

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Global Update: Meningitis Vaccine Gets Longer Window Without Refrigeration

In what may prove to be a major advance for Africa’s “meningitis belt,” regulatory authorities have decided that a new meningitis vaccine could be stored without refrigeration for up to four days.

The announcement was made last week at a conference in Atlanta of the American Society of Tropical Medicine and Hygiene. While a few days may seem trivial, the hardest part of protecting poor countries is often keeping a vaccine cold while moving it from electrified cities to villages with no power. In antipolio drives, for example, the freezers, generators and fuel needed to make ice for the shoulder bags of vaccinators can cost more than the vaccine.

The new vaccine, MenAfriVac, made in India for 50 cents a dose, was introduced in 2010. In bad years, epidemics during the hot harmattan winds have killed as many as 25,000 Africans and disabled 50,000 more. In Chad this year, vaccination drove down cases to near zero in districts where it was used, while others nearby had serious outbreaks.

Experts decided that the vaccine is safe for four days as long as it stays below 104 degrees.

While temperatures get higher than that in Africa, said Dr. Godwin Enwere, medical director for the Meningitis Vaccine Project, teams normally get the vaccine out of coolers at dawn, drive to villages and finish before the day heats up. Other experts said it should be kept in the shade and monitored with colored paper “dots” that darken after hours in the heat.

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DealBook: Latest Slip for H.P. Forces a New Write-Down

Hewlett-Packard‘s already troubled history with deal-making just got worse.

The technology giant said on Tuesday that it had taken an $8.8 billion accounting charge, in part related to accounting problems at Autonomy, the British software company it bought for $10 billion last year. The announcement comes just one quarter after another large write-down by H.P. in relation to Electronic Data Systems, which itself follows a string of deal-making missteps by the company.

“I’m speechless,” said Brian Marshall, an analyst at the ISI Group, which downgraded H.P. to “neutral” from “buy” following the news on Tuesday.

The charge contributed to a quarterly loss of $6.9 billion for H.P., compared with a $200 million profit in the quarter a year earlier. H.P. said it had discovered “serious accounting improprieties” and “outright misrepresentations” at Automony that took place prior to the acquisition.

The company’s shares fell more than 11 percent on Tuesday to around $11.74.

The latest setback comes as H.P. has struggled to revive its business. For years, H.P. has turned to deal-making to help it grow, buying of E.D.S., Palm and Compaq. Since 2001, the company has spent at least $67 billion on acquisitions, according to Robert W. Baird & Company. That’s more than H.P.’s current market capitalization of about $23.4 billion.

“If you think about the companies they’ve acquired over the last several years,” Mr. Marshall said, “it’s just unbelievable how much value has been destroyed.”

In August, H.P. said it would take an $8 billion charge related to E.D.S., which it acquired for $13.9 billion four years earlier. The business, which provides consulting services to enterprise clients, had been losing ground to rivals.

Last year, H.P. announced a $1.7 billion charge when it said it would close its webOS device business — just a year after picking up the handset maker Palm for $1.2 billion.

The deal-making engine, however, has recently slowed as its cash pile has dwindle. The company reported about $11.3 billion of cash in the recent quarter. While that an improvement over the quarter last year, it is lower than the $13 billion of cash in 2009.

The takeover of Autonomy was criticized as too expensive when it was announced in the summer of 2011. Léo Apotheker, the chief executive at the time, soon resigned. He was replaced by Meg Whitman, a former head of eBay.

Ms. Whitman said on Tuesday that the company was “starting to see progress in key areas.” The company said in a statement that it remained “100 percent committed” to Autonomy, despite being “extremely disappointed” by its findings.

Some analysts had been skeptical of Autonomy before Tuesday’s announcement. But the size of the write-down was largely unexpected. And the language H.P. used — “improprieties” and “misrepresentations” — came as a surprise.

“That’s not something I expected to hear,” said Jayson Noland, an analyst at Robert W. Baird & Company.

The ISI analyst, Mr. Marshall, described the company as being in “free fall.”

“There has been perhaps irreparable damage to the franchise,” Mr. Marshall said. “A lot of people in the tech industry are pretty sad about that.”

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Judge denies bid for Nativity displays in Santa Monica

A person jogs by last year's Nativity scene in Palisades Park. (Gina Ferazzi / Los Angeles Times / November 19, 2012)

By Martha Groves

November 19, 2012, 1:40 p.m.

The city of Santa Monica can bar seasonal displays, including a Nativity scene that has appeared in Palisades Park for nearly 60 years, a federal judge ruled Monday.

In a closely watched case that has attracted national attention, Judge Audrey B. Collins denied a request from the Santa Monica Nativity Scenes Committee to erect multiple large displays depicting the story of the birth of Jesus in the park overlooking the ocean. The coalition of churches has erected the displays every December since the 1950s.

But last year, after requests for display spots exceeded the space allotted, the city held a lottery to allocate spaces. Atheists won 18 of 21 spots. A Jewish group won another. The traditional Nativity story that used to take up 14 displays was crammed into two.

Controversy erupted, and as a result, the city decided the lottery would become increasingly costly. Last June, the City Council voted to ban all private unattended displays.

In October, Nativity scene proponents filed suit in federal court to allow the traditional Christian displays to continue. In a 27-page tentative ruling, Collins denied the group permission to erect their displays this year while the case is pending.

"The atheists won," said William Becker, attorney for the Nativity group. He then went on to compare the city to Pontius Pilate, the judge at Jesus' trial, saying: "It's a shame about Christmas. Pontius Pilate was exactly the same kind of administrator."

Santa Monica's attorney, Barry A. Rosenbaum, said the city is "very pleased" with the ruling. The judge, he said, "understood the government interests and that [groups wanting to put up displays] have a number of alternatives to erect displays." 

All the parties are due back in court Dec. 3, when the judge will hear additional arguments in the case.

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Report: Over 1 Million Apps Have Been Submitted to iOS App Store

Mobile app development hit a major milestone today when Apple accepted its one-millionth — yes, one-millionth — app for sale in the App Store, further underscoring Cupertino’s lead in the apps space.

Yes, the number of apps accepted differs from the number of apps available in the App Store, since not every application can stick it out over the long haul. Still, it highlights the remarkable staying power of the majority of iOS apps and the overwhelming popularity of the iOS platform.

“It really shows how popular iOS has been with software developers,” Gartner analyst Brian Blau told Wired. “And [Apple] really has attracted quite a few more software developers. It’s relatively easy to start developing for iOS — you can get up and running pretty quickly.”

Appsfire, an app that lets you track, discover, and find deals on new apps, arrived at the number by following and disseminating Apple’s official feed of iTunes information. The one million figure reflects apps that have been approved and gone live in the App Store since it opened to developers in 2008.

“I think it’s pretty plausible, but it’s hard to tell,” Blau said of Appsfire’s calculations. “If it’s not a million apps, it’s probably pretty close.”

According to Apple’s latest publicly released numbers, the total number of apps currently available in the App Store tops 700,000. Some of those apps, like Chomp, eventually were purchased by other companies and integrated into the buyer’s products. Others, like event discovery app RAVN, eventually decide to close down and shut their doors for one reason or another.

The number of apps Apple has in its ecosystem has long been a bonus over competitors like Android and Windows Phone, but Android’s Google Play Store is catching up in terms of numbers. Officially, it houses over 600,000 apps and games, with 20 billion installs so far. But quality is not necessarily an indicator of quality.

“In general, the Apple app ecosystem is far ahead of Google Play,” Appsfire co-founder Ouriel Ohayon told Wired via email. “There are more apps (not a lot more), more money that flows in that business too. Google still is behind in terms of billing experience, piracy, and quality of apps in general.”

Indeed, just this weekend a bundle of fake Apple apps like iMovie and GarageBand popped up in Play Store, only to be removed a few hours later. Google’s policy of openness plays against it in this respect, whereas Apple’s strict set of guidelines and conditions for apps to get accepted in the App Store are largely better at preventing scams like that from being approved. “Apple is also ahead in terms of apps specifically made for tablets — over 275,000,” Ohayon said.

The total number of apps accepted into the App Store is not a stat publicly announced from Apple thus far, so it’s unlikely we’ll see official confirmation of this number at any future earnings calls or media events.

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GetGlue Acquired by Viggle for $25million, Stock

NEW YORK (TheWrap.com) – Viggle Inc. has purchased GetGlue for $ 25 million in cash and 48.3 million shares in stock, with the goal of making the merged companies the dominate force in social TV. Together, the two companies will have more than 4 million users.

Viggle stock was up 10.81 percent in early trading Monday, to $ 1.23 a share. That makes the value of GetGlue’s stock payout nearly $ 60 million.

Viggle Inc., a reward-based site that launched in January, will operate both brands. GetGlue founder and CEO Alex Iskold will join Viggle in a senior executive position on its management team and as a member of its Board of Directors. Viggle will also hire all 34 GetGlue employees.

“With this deal, we are combining very experienced and creative product, engineering and management teams that will continue to build great user experiences and provide industry leading platforms for consumers, networks and advertisers,” said Viggle CEO Robert F.X. Sillerman. “We will also be vastly increasing the Viggle user base and quadrupling our network partnerships.”

“We are very excited to join forces with Viggle! GetGlue has built a Social TV product that people love, and Viggle has become their favorite loyalty program for TV,” Iskold said. “Together we are positioned to deliver the next generation second screen experiences that delight and benefit users, networks and major brands.”

New York City-based GetGlue, founded in 2007, enables users to tell friends what they’re watching, track their favorite shows, and find videos, images, and links. It has more than 3.2 million registered users.

Viggle has 1.2 million registered users who receive points for loyalty and engagement. They can redeem points from businesses including Best Buy, Amazon, Fandango, Hulu Plus and iTunes.

The deal is only the latest for Sillerman, whose SFX Entertainment also recently purchased the electronic dance music companies Disco Donnie Presents and Life in Color. He said SFX expects up to 50 additional deals to come to fruition in the near future.

TV News Headlines – Yahoo! News

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News Analysis: Tainted-Drug Deaths Spawn Heated Debate Over F.D.A.’s Powers

If she kept being defensive, Mr. Dingell warned, “I would assure you that you are putting your head in the noose.”

Hearings like this may be partly theater, a chance for politicians to strut their righteous indignation and threaten tough new laws. But a public health disaster had occurred on Dr. Hamburg’s watch, one about which she has been mostly silent, and the hearing was a chance for her to show leadership and mastery. Instead, her answers were vague and long-winded, and it was clear by the reactions of the panel members that they brought more frustration than clarity.

The hearing was titled “The Fungal Meningitis Outbreak: Could It Have Been Prevented?” But the question was never really answered, and hours of testimony left the ominous impression that the country has few safeguards to prevent an outbreak like that from happening again.

Democrats on the committee wanted to quickly pass new legislation to strengthen the F.DA.’s ability to police rogue drug makers, but Republicans seemed less eager. It was not clear whether the hearing would actually accomplish anything.

So far, 33 people have died and 447 others have become ill from injections of a fungus-contaminated steroid drug made by the New England Compounding Center in Framingham, Mass. The number of cases is still rising. Inspections of the drug maker have revealed a stunning array of dangerous practices and unclean equipment, as well as vials of medicine with visible blobs of fungal matter floating in it. The center has been shut down.

Joyce Lovelace, a white-haired woman with a soft voice and a Southern accent, addressed the committee from a wheelchair. She described the illness and death of her husband, Eddie, who at 78 had still been serving as a judge in Kentucky.

“It was not an easy death we witnessed,” Mrs. Lovelace said. She added, “These committees, the F.D.A., the N.E.C.C., whoever is responsible, I want them to know their lack of attention to their duties cost my husband his life.”

The next witness was Barry Cadden, the chief pharmacist and an owner of the New England Compounding Center. Flanked by his lawyers, he invoked the right to avoid incriminating himself and did not answer any questions.

Mr. Cadden’s company was shipping a huge array of drugs to clinics and hospitals around the country, including some of the nation’s most prestigious medical centers. The business, which opened in 1998, had several run-ins with the F.D.A. and with health officials in Massachusetts over the years, and pharmacy boards in other states had complained about its practices. But it kept operating.

Dr. Hamburg came in for a grilling because a deadly outbreak from a contaminated drug is exactly the kind of public health tragedy that her agency is meant to prevent.

She used much of her testimony to insist that the agency’s authority over the New England Compounding Center and other companies like it was not clear, and that new laws were required. Currently, she said, companies like New England Compounding could thwart oversight by suing the F.D.A. if it tried to regulate them, and by refusing to allow inspections without search warrants.

But the lawmakers said that existing laws gave the agency all the power it needed, and that it had simply failed to use that power.

“Commissioner, two agencies here have dropped the ball,” Mr. Dingell said, referring to the F.D.A. and the Massachusetts Board of Pharmacy.

The issue is that New England Compounding identified itself as a compounding pharmacy, a practice that is supposed to involve making unusual drug formulations to fill prescriptions for individual patients with special needs. Compounding is legal on a small scale, and does not have to follow the strict rules that apply to mass-produced drugs. It is generally regulated by states rather than the federal government, which has jurisdiction over manufacturers.

But the company was mass-producing drugs and shipping them all over the country, without the manufacturing standards or inspections imposed on big drug makers. It shipped 16,676 vials of the contaminated steroid, methylprednisolone, to 23 states, and 14,000 people were injected with it.

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