UPDATE 1-Rajaratnam sentenced to 11 years in prison
By Grant McCoolNEW YORK, Oct 13 (Reuters) - Raj Rajaratnam, a self-made
hedge fund tycoon convicted in the biggest Wall Street trading
scandal in a generation, was ordered on Thursday to serve 11
years in prison, one of the longest sentences ever in an
insider-trading case.The sentence was lighter than the 19-1/2 year minimum
prison term that prosecutors had sought, but is still above the
10 years handed down recently in another major insider trading
case. Federal inmates typically must serve at least 85 percent
of their terms before being eligible for release.It was not immediately clear if Rajaratnam would be ordered
to prison immediately, at a later date, or allowed to remain
under house arrest while he appeals his conviction. Prosecutors
and defense lawyers were still discussing sentencing matters in
court on Thursday morning after the judge announced the
intended prison term.The Galleon Group fund founder, 54, made no statement on
his behalf before the sentence was pronounced by U.S. District
Judge Richard Holwell at a court hearing in Manhattan. The
judge also said he would impose a $10 million fine.Rajaratnam was convicted of 14 securities fraud and
conspiracy charges in May after a two-month trial.Prosecutors had made Rajaratnam the central figure of a
sprawling criminal case, unveiled in October 2009, that touched
some of America’s top companies, including Goldman Sachs Group
Inc , Intel Corp , IBM and the elite
McKinsey & Co consultancy.”There’s no one who’s Mr. Rajaratnam’s equal in terms of
the length and breadth of his insider trading crimes,”
Assistant U.S. Attorney Reed Brodsky told the court, urging for
the maximum punishment.Prosecutors called Rajaratnam the “modern face” of insider
trading, putting him in a dubious pantheon of Wall Street power
players such as takeover specialist Ivan Boesky and junk bond
financier Michael Milken, principal figures in a mid-1980s
insider-trading case. Both men served about two years in
prison.The Galleon case sent shock waves through Wall Street and
the hedge fund industry, where traders can try to get an edge
at all costs. Prosecutors say Rajaratnam and others crossed the
line by pumping corporate insiders for corporate earnings or
details of mergers that had not yet been announced.The investigation was marked by the most extensive use of
secret FBI phone taps in a white-collar case. Such tactics
usually are reserved for Mafia and drug trafficking
investigations.The Galleon case has been a major victory for the U.S.
Attorney’s Office in Manhattan. Out of 26 people, including
traders, lawyers, executives and consultants charged in the
case, 25 have pleaded guilty or were convicted at trial of
supplying or trading on illicit stock tips. One is at large.Insider-trading defendants often get sentences lower than
what’s prescribed in federal guidelines, out of the view that
their crime is less harmful than other types of white-collar
misdeeds.But judges have been handing down some tough sentences
recently. A former Galleon employee, stock trader Zvi Goffer,
34, was sentenced last month to 10 years in prison and ordered
to forfeit $10 million after being found guilty at trial.
Bullish Apple investors start calling for dividend
* Has cash hoard of $75 blnBy Sam Forgione and Supantha MukherjeeOct 12 (Reuters) - Apple Inc is starting to hear a
common refrain from investors: Show us the money.After the death of chairman and chief innovator Steve Jobs
last week, investors still like what they see
at Apple: record demand for the latest iPhone 4S pushed its
stock price near an all-time high. And it has a cash hoard of
$75 billion.A Thomson Reuters survey of 11 portfolio managers taken
after the news of Jobs’ death showed strong support for Apple’s
new management team led by Chief Executive Tim Cook, and
confidence that Apple has at least a few years of great
products in development.But they also want Apple to start giving up some cash.”I would opt for a meaningful dividend,” said Peter
Deininger, a portfolio manager at Columbia Large Cap Growth
Fund, one of Apple’s largest investors.”Given the magnitude of the cash balance and the ongoing
free cash flow generation, the company could make a statement
about its ability to sustain those flows,” Deininger added.Six of the 11 money managers polled by Reuters called for a
dividend payout as a reward for their loyalty — something they
fear will be tested as Cook tries to fill Jobs’ shoes.Ten portfolio managers said they still hold Apple stock on
faith that Cook will be able to deliver on Jobs’s vision in the
near term. But five managers expect investor faith in Apple to
be tested in the longer term.”I worry that Steve was a center of gravity for the company
and, over time, people will say ‘I wanted to work for Steve’
and go and do something else,” said David Eiswert of T. Rowe
Price. “That will be something to watch over the next year or
two.”Apple has long resisted a dividend. It has put its money
toward internal product development, made the rare acquisition
— and built its cash stockpile, which now accounts for about a
fifth of its value. Apple’s market cap soared to just shy of
$349 billion when Jobs stepped down in August, from $5 billion
when he returned to the company in 1997.That unusual torrid growth in a large company has one money
manager in the survey bracing for an eventual slowdown.”We haven’t seen a company this size grow, so it has to
decelerate,” said Richard Sheiner of Geneva Advisors.So far investors are sticking with the company.”The creative talent at Apple is broad and deep, and it has
established a ‘brand moat’ with the consumer,” said Nigel
Holland, who helps manage $565 billion at Legal & General
Investment Management.And that’s a big reason why three of the managers surveyed
said they have bought up all the Apple shares they are allowed
to.”There’s every reason to own Apple stock, and we are
committed to owning it over the next couple of years,” said
Keith Wirtz, chief investment officer of Fifth Third Asset
Management.Bruce Olson, co-portfolio manager of the Wells Fargo
Advantage Growth Fund , agreed. “The coast is pretty
clear for them for the next five years,” he said.Beyond the short term, however, some shareholders are
worried about whether Apple can continue to push out innovative
gadgets after the product pipeline Jobs left behind is tapped
out.”If we saw a slowdown on product launches and developments,
that would give us some pause. Less people camping out for a
few days to get the new product — that would be symptomatic of
it losing its touch,” Wirtz said.One fund manager polled is not waiting around for Apple to
fall from grace.”We don’t have shares in Apple,” said Kim Caughey Forrest,
vice president and senior analyst at Fort Pitt Capital Group.
“Jobs’ death contributed to the skepticism, but it is also the
closed environment of selling hardware and software together
that works extremely well for consumers but not so well for
business.”
