Business Blog Posts

Rajaratnam, a one-time billionaire, will remain free on bail until sentencing on July 29, U.S. District Judge Richard Holwell ruled after the jury delivered its verdict.

Rajaratnam was expressionless during the verdict reading by a courtroom deputy.

He could face 15-1/2 to 19-1/2 years in a federal prison under sentencing guidelines, prosecutors said.

The Manhattan federal jury announced its unanimous verdict on the 12th day of deliberations in what many legal experts said was a strong prosecution case using FBI phone taps and testimony of three former friends and associates of Rajaratnam.

The jury convicted Rajaratnam of nine counts of securities fraud and five counts of conspiracy for what prosecutors describe as the money manager's central role in the most sweeping probe of insider trading at hedge funds on record.

During the two-month trial, prosecutors hammered at their argument that Rajaratnam cheated to gain an unfair advantage in the stock market from 2003 to March 2009, reaping an illicit $63.8 million.

Defense lawyers had stuck consistently to their main theme that Rajaratnam's trades were guided by a trove of research and public information, not secrets leaked by highly-placed corporate insiders.

Sri Lankan-born Rajaratnam, 53, was ordered to be fitted with an electronic monitoring device while out on bail.

Prosecutors had asked the judge to jail Rajaratnam pending sentencing, but the judge rejected that request.

The case is USA v Raj Rajaratnam et al, U.S. District Court for the Southern District of New York, No. 09-01184.

(Reporting by Grant McCool, Basil Katz and Jonathan Stempel, editing by Dave Zimmerman)

AIG shares fell more than 2 percent in premarket trading on the news, continuing the sharp slide that has knocked more than a third off the company's value in the last four months. At the premarket price, AIG is less than 30 cents a share from the government's break-even point.

To be sure, when AIG was rescued in September 2008, few expected it would even exist today. The company received $182 billion in bailouts and managed to restructure while preserving two core businesses.

But the prospective offering of 100 million shares by the company and 200 million shares by the Treasury has been pressured by the slide in AIG's stock.

A mix of heavy interest from short-sellers betting the shares would fall further, dilution fears for those with long positions and operational questions linked to legacy charges at two AIG units weighed on the shares, driving them from the mid-$40s range to the upper $20s.

AIG said last Friday it needed to raise $3 billion in the offering, which would imply a price of around $30 a share. But one investor said Wednesday the offering was more likely to price at a discount to where the shares are now, a view shared by most sources familiar with the process.

If the stock priced at a 5 percent discount to Tuesday's close, as has been suggested is possible, the offering would be worth $8.44 billion.

When Wall Street banks offered their services to manage the stock sale in January, there was talk of an offering of more than $20 billion.

The U.S. Treasury also has the option to sell an extra 45 million shares to cover any over-allotments, which would raise the value of the sale to more than $10 billion.

Assuming the Treasury sells only the 200 million shares, the government's stake in AIG would fall to 77 percent from the current 92 percent.

(Reporting by Ben Berkowitz; Editing by Derek Caney, Maureen Bavdek, Dave Zimmerman)

The Mortgage Bankers Association will release the Weekly Mortgage Market Index for the week ended May 6 at 1100 GMT. The mortgage market index read 458.7 and the refinancing index was 2,081.6 in the previous week.

Major U.S. banks are willing to pay as much as $5 billion to settle claims by federal and state officials of improper mortgage foreclosure practices, the Wall Street Journal reported, citing people familiar with the situation.

The Commerce Department releases at 1230 GMT March international trade numbers. Economists in a Reuters survey forecast a $47.0 billion deficit compared with a $45.76 billion deficit in February.

The Treasury Department issues the monthly budget for April. Economists in a Reuters survey forecast a $62.0 billion deficit compared with a March budget deficit of $188.2 billion.

Companies announcing results on Wednesday include Cisco Systems (CSCO.O), Macy's, Inc. (M.N) and Symantec (SYMC.O).

HSBC (0005.HK) (HSBA.L) is to streamline its wealth management business, retreat from retail banking in some countries and may sell its U.S. credit cards arm as new CEO Stuart Gulliver attempts to cut $3.5 billion in costs and revive flagging profits.

Brent crude rose past $118 a barrel on Wednesday after a jump in China's implied oil demand to the third-highest level on record showed that Beijing's efforts to cool the economy of the second-largest oil consumer are doing little to dent use.

Facebook users' personal information could have been accidentally leaked to third parties, in particular advertisers, over the past few years, Symantec Corp (SYMC.O) said in its official blog.

Japan's Nikkei .N225 rose for a second straight day, boosted by gains in companies that provided positive outlooks for the current business year such as Orix Corp (8591.T) and NEC Corp (6701.T), while investors largely shrugged off slightly stronger-than-expected inflation data from China.

China's inflation eased in April to 5.3 percent and other data, including for industrial output and loans, suggested the world's second-biggest economy may be cooling and there was less need for further aggressive monetary tightening.

The FTSEurofirst 300 .FTEU3 index of top European shares extended the previous session's gains and was up 0.3 percent.

The Dow Jones industrial average .DJI was up 75.68 points, or 0.60 percent, at 12,760.36. The Standard & Poor's 500 Index .SPX was up 10.87 points, or 0.81 percent, at 1,357.16. The Nasdaq Composite Index .IXIC was up 28.64 points, or 1.01 percent, at 2,871.89. (Reporting by Atul Prakash; Editing by Louise Heavens )

Oil prices and the euro dipped briefly after China's April inflation came in slightly above expectations, but other data, including industrial output, suggested slower activity and less room for aggressive tightening to curb growth.

"Price pressures are still uncomfortably strong, but there are some signs in today's data that policy measures put in place over the last six months or so are having an impact," said Brian Jackson, an economist with Royal Bank of Canada in Hong Kong.

Stocks remained supported by a recovery in commodities after last week's near-record sell-off and an easing of concerns about any Greek debt restructure following a debt downgrade.

"The dominant theme this week is whether last week's fall in commodities was just a speculative reversal rather than a brutal reassessment and it appears that, yes, it was. The market was running ahead of itself," said Adrian Foster, head of financial markets research, Asia-Pacific at Rabobank International in Hong Kong.

Japan's benchmark Nikkei 225 index .N225 closed up 0.5 percent, while Hong Kong's Hang Seng .HSI was flat and South Korea's Kospi .KS11 was up 1.3 percent after a holiday on Tuesday.

Asian shares outside Japan .MIAPJ0000PUS rose 1.1 percent on Wednesday, while Australia's S&P/ASX 200 .AXJO up 1.2 percent, with global miner Rio Tinto (RIO.AX) moving up 1.8 percent.

The euro held on to gains in Asia, trading at $1.4392. The currency has been moving away from a three-week low, helped by stabilizing commodity prices and chances of another aid package for Greece.

However, a further move to the upside could be constrained by the chance of more negative news about the prospects of the euro zone's efforts to help Greece and other financially strained countries.

CHINA DATA

China's headline consumer price inflation slowed to 5.3 percent in April from a 32-month high of 5.4 percent in March, but missed market forecasts for a decline to 5.2 percent.

The overall data was mixed with industrial output considerably weaker than expected, climbing 13.4 percent in April and retail sales also coming in below forecasts.

"The economy is slowing, but not very seriously," said Chen Gang, an economist with CEBM in Shanghai. "It is still far from the warning line for the Chinese leadership. There is no room for the central bank to relax its monetary tightening."

The inflation data followed Chinese trade figures on Tuesday that suggested still-strong global demand, although a slowdown in imports raised concerns for some analysts about slower growth.

Analysts said it was clear the economy was slowing but were divided on the likely policy response to curb inflation.

China's central bank has raised interest rates four times since October and Premier Wen Jiabao has signaled a hawkish stance for the coming months to bring inflation under control. The government has a 4 percent ceiling on annual inflation.

Spot gold edged up 0.4 percent to 1522.74, heading for a fourth day in a row of gains, while silver rose 1 percent.

"Gold is generally benefiting from the return of confidence from investors," said Darren Heathcote, head of trading at Ivestec Australia. "They are very happy buying on the dip, as we see the same old problems hanging around."

Oil prices recovered from an initial dip on the China data to be slightly higher. Brent crude was trading at $117.86, continuing the march back from last week's steep fall as rising waters along the Mississippi River threatened to disrupt petroleum plants in Louisiana in the next two weeks.

The Australian dollar, which is sensitive to Chinese demand for the country's coal and iron ore, was little changed at $1.0857.

The world's biggest automaker is facing another tough year as a severe shortage of parts caused by Japan's biggest earthquake on record hammers production just as it was putting its recall woes behind it.

President Akio Toyoda said Wednesday the automaker should see a pick-up in output from June to 70 percent of prequake plans, earlier than expected on April 22 when it forecast a return to full production by November or December from less than half of planned volumes now. It did not specify how fast it would get there.

On Tuesday Toyota denied a Nikkei newspaper report on Tuesday that normal production would come two to three months earlier than planned.

The massive hit to production will almost certainly mean Toyota will fall behind General Motors Co and possibly Volkswagen AG to rank third in global vehicle sales this year.

With inventory tight and supplies short for popular models such as the Prius hybrid, Toyota is losing consumers to rivals such as South Korea's Hyundai Motor Co, which has been nipping at its heels for the past several years.

Toyota said on Wednesday its January-March operating profit was 46.1 billion yen ($570 million) , compared with an average estimate of 94.6 billion yen from 17 analysts who revised their numbers after the quake, according to Thomson Reuters I/B/E/S.

Fourth-quarter net profit, which includes earnings made in China, fell 77 percent to 25.4 billion yen.

For the business year to March 2012, analysts forecast an average operating profit of 307.5 billion yen ($3.83 billion), down 34 percent from 468 billion yen last year. Uncertainties over the broken supply chain have yielded a wide range, from a loss of 25 billion yen to a profit of 846 billion yen.

Analysts say the disruption is a temporary one caused by the shortage of supply, not demand, and that Japanese automakers should reverse the trend next business year.

Toyota's shares have led a fall in Japanese auto stocks since the disaster, losing 11 percent compared with 9.9 percent at Honda and 5.8 percent at Nissan as of Tuesday's close. ($1 = 80.835 Japanese Yen)

(Reporting by Chang-Ran Kim; Editing by Chris Gallagher)