>> susie: guilty on all counts. former hedge fund titan raj rajaratnam is convicted of conspiracy and securities fraud. it's a landmark victory in the government's crackdown on insider trading on wall street. you're watching "nightly business report" for wednesday, may 11. this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: this program is made possible

by contributions to your pbs station from viewers like you. captioning sponsored by wpbt >> susie: good evening everyone. my colleague tom hudson will be along later in the program. a verdict today in the largest probe of insider trading at a hedge fund in u-s history: billionaire investor raj rajaratnam was found guilty of all 14 counts. a jury convicted him on five counts of conspiracy to commit securities fraud and nine counts of securities fraud. the conviction, after an eight- week trial, is a huge win for the government's efforts to punish insider trading on wall street. we'll get analysis from a legal expert in just a moment, but first, erika miller was at the courthouse and has details on today's verdict. >> reporter: once a high-flying wall street investor, raj

rajartnam is now a convicted felon. the founder of the galleon group hedge fund was convicted in a scheme that netted him $64 million in illegal profits. outside the courthouse, his lawyer john dowd vowed to appeal. "we will see you in the second circuit." prosecutors did not address the media circus after the verdict, but they did release a statement, saying "the message today is clear-- there are rules and there are laws, and they apply to everyone, no matter who you are or how much money you have." prosecutors were able to use rajartnam's own words against him by using wiretapped phone conversations, a first in a securities case. the illegal trades were in many well-known companies, including advanced micro devices, goldman sachs and ebay. defense lawyers argued rajaratnam's decisions to buy and sell were based on careful research, not inside information. they view it as a victory that, of an initial 37 charges against rajartnam, only 14 made it to trial.

>> the score is 23 to 14 for the defense. >> reporter: rajaratnam is the first of 26 people to go to trial in this insider trading probe. 21 of them have pleaded guilty. rajaratnam will be back in court july 29 for sentencing. until then, he will be electronically monitored to make sure he doesn't flee the country. under federal sentencing guidelines, he faces between 15.5 and 19.5 years in jail. erika miller, "nightly business report," new york. >> susie: joining us now for more analysis on the rajaratnam verdict, steven feldman, former assistant u.s. prosecutor for new york's securities and commodities fraud task force and now a white collar criminal defense attorney at herrick, feinsteen. steven, nice to have you with us. >> hi, susie. >> susie: were you surprised by the verdict, guilty on call counts? >> no. this was a case in which the government had extremely

strong evidence. they had during the course of the actual crime recorded the tapes of multiple phone calls, then they arrested his confidant, the people who worked with him, they were able to use all those people against raj, so, and they had narrators to explain what was going on. it was an overwhelming case of evidence by the government. >> susie: and it was an overwhelmingly decisive verdict on all counts. so what impact is this going to have on insider trading? does it stop this kind of behavior? >> absolutely, the government creates disincentives for people who were thinking of crossing the line. that's the point of this kind of case, is to do deterrence. i think the government has been successful with that. insider trading has become a top target among wall street service providers. if people like me are out there, in the firms giving talks on what insider trading is about and helping the traders know what areas are

gray so they don't cross the line. so it is having an effect on people changing the way they do their business. so they they don't violate the law. >> susie: i know that your whole line of work is white collar criminal defense, but i'm just wondering how widespread is insider trading. are there more raja's out there who are misusing information? >> look, we can't know what's going on out there in terms of all those details. what the government may well -- uncovered may be the tip of the iceberg or it may be the worst people doing it and they're the real poster child. so the government gets exactly the right people. we can't know that. but you hope, as a society, that by taking these crimes seriously, by going after even the biggest and the richest and the most successful people in the industry, that they will change their behavior, and that others will not violate the law. >> susie: the real big question is what does this mean for investors, what does it mean for the markets. is there any reason why individual investors should feel more reassured tonight

that the markets are safer, that the rules are being obeyed? >> the investors should realize that over the last couple years now the u.s. attorney's office has taken this very seriously. raj's one conviction today and it was big because it was after a trial, but as you pointed there have were more than two dozen people involved in this case, the government has gotten a huge number of convictions on insider trading. so to the degree that the market was stacked and the individual investors couldn't be sure whether they were getting a fair shake, things have changed, to some degree. but as you pointed out before, we can't know how prevalent this is, and hopefully both the s. e. c. and d. o. j. create a system where people are not cheated. >> susie: when are your thoughts on sentencing? raj faces up to 20 years. how harsh do you think the judge is going to be? >> raj faces 20 years on each one of those nine counts he was convicted of.

so that's 180. and he faces five years on each one of the five conspiracy counts, that's another 25. so he's facing 205 years as a maximum. the guide lines here put it more in the range of around 20 years. the judge knows what raj was up to, in excruciating detail, that's one of the dangers of going to trial. so i think the judge is going to give a sentence that he feels is commensurate with the extremely outrage us behavior he was exposed to. what did we hear about at the trial, we heard members of the board at goldman sax picking up the phone and calling raj after important award decisions are shared. so it's certainly the kind of information that will give the judge pause, and may make the judge real angry. >> susie: we'll find out on july 29 when they do the sentencing. thank you so much for coming on the program tonight. we really appreciate it. >> thank you. >> susie: we've been speaking with steven feldman, white collar criminal defense attorney at her rick finesteen.

here are the stories in tonight's n.b.r. newswheel: commodities stumbled today after a government report showed a big drop in u.s. demand for gasoline. oil fell more than 5%, settling at $98.21 a barrel in new york. gasoline futures plunged 7% to $3.12 a gallon. trading in oil and gasoline futures was briefly halted in chicago when the price slides triggered a circuit breaker. well, energy pulled stocks lower. the dow fell 130 points, the nasdaq dropped nearly 27 and the s&p 500 off 15 points. the selling pressures lifted big board volume to almost one billion shares, while nasdaq volume rose to just under 2.3 billion shares. a surge in revenue collection helped cut the u.s. monthly budget deficit in half last month compared to a year ago. look at the numbers. april's budget deficit was $40.5 billion. u.s. trade was a mixed bag in march as soaring oil prices

outweighed record exports. the trade deficit rose 6% to $48 billion. exports increased to the most on record since 1993. a weaker dollar has made u.s. good cheaper overseas, but oil prices spiked 18% from the previous month. and bailed-out insurance company a.i.g. and uncle sam will sell 300 million a.i.g. shares to the public. that's less than originally expected. the stock sale would be a big step by the government toward disentangling itself from the company. a.i.g. didn't set a price for the shares in a regulatory filing. at&t and t-mobile defended their proposed merger on capitol hill today. lawmakers grilled the companies on whether the $39 billion deal means better service and lower prices for consumers, and senators made it clear it's up to at&t to prove it's not killing competition. darren gersh reports.

>> reporter: the title of today's hearing says what many lawmakers fear: the at&t/t-mobile merger: is humpty-dumpty being put back together again? consumer advocates like gigi sohn say yes. >> we will go back to the days when this phone was in use. only two companies ruled the cellular phone market, resulting in high prices for consumers and little innovation. at&t president and c.e.o. randall stephenson told senators the merger is the only way his company can get the wireless spectrum it needs to roll out faster mobile networks. >> history has demonstrated that these mergers have traditionally generated significant cost synergies and capacity benefits, which have translated into cost savings in the consumer's pocket. >> reporter: if the merger goes through, at&t and verizon will divide up close to 80% of industry revenues. sprint c.e.o. dan hesse argued that amounts to a new duopoly-- a situation where two companies have the power to set prices and dictate terms competitors must follow.

sprint would be left behind. >> it does make us more of a takeover target over time as the competitive environment gets much more difficult for sprint. >> reporter: congress may hold hearings, but the big decisions about this merger will be made by the justice department and federal communications commission. the key issue? how many assets will at&t have to sell off to convince regulators the new company will not put competition on hold. darren gersh, "nightly business report," washington. >> susie: for many small businesses, high gasoline prices are the latest blow in an already stagnant economy. for companies that require a lot of driving or long commutes, the additional costs can be devastating. tonight, in our series "pumped up prices," diane eastabrook introduces us to a pet sitter who's been forced to re-evaluate how she does business. >> reporter: professional pet sitter kelly moore spends much of her day behind the wheel of her honda c.r.v., crisscrossing

chicago's western suburbs and visiting the homes of out-of- town clients whose cats need care. >> hi, buddy. >> reporter: fuel is moore's biggest operating expense, so when gas prices headed north of $4 a gallon last month, she was forced to add a fuel surcharge. >> just based on this time last year and now, it's like 30% more i'm spending on fuel because of how far i do travel still. >> reporter: even with the surcharge, moore says she's had to completely rethink how she does business. >> i used to send out a quarterly newsletter through the mail... and now i have a website. instead of being out in my car making three different trips a day, now i'm out twice a day. i was thinking to myself, "if i only go out twice a day, that is definitely going to cut down on my time and, of course, be more efficient if i could do my clients in a radius that made sense."

and try to fill up at places that have cheaper gas. since i live in cook county, i always try to fill up when i come to dupage county because it's cheaper. and also i do have a sam's club card. i go down to the one in countryside because usually i get 5 cents off per gallon. hey, quincy. >> reporter: moore's also seeing some of her regular wards less frequently. she says their owners are traveling less, and she wonders if high gas prices are the reason. >> they're not taking these little weekend trips like they used to. they're waiting for the big trip in june, or july, or august when the kids are out. >> reporter: moore is hopeful gasoline will drop at or below $4. but even if it does, she thinks she'll still have to watch her budget. >> i'm still going to have to be very diligent about what i spend and look at my clients. >> reporter: diane eastabrook, "nightly business report," lagrange park, illinois.

>> susie: it was a sea of red on wall street. stocks sold off at the open as prices for oil and other commodities tumbled. let's take a look in tonight's "market focus." not surprisingly, energy stocks led the way down. shares of exxon-mobil and chevron were among the biggest losers in the dow, both off at least 2%. they were hit hard on that plunge in oil prices we reported about earlier in the program. cabot was the weakest energy stock in the s&p 500, off almost

6%. also weighing on the dow? alcoa and caterpillar. they were victims of falling commodities prices. but caterpillar's c.e.o. says the company is in a sweet spot and could see a pop in equipment demand if oil stays below $100 a barrel. disney shares tumbled more than 5% and was the worst performer in the dow. investors dumped the stock after that disappointing earnings report we told you about last night. now, there were a few blue chip standouts today, like intel. the chip maker boosted its quarterly dividend 16% to 21 cents a share. the stock closed at $23.41. looking at its performance, you can see it's up nearly 20% just since mid-april. investors went shopping for macy's. the retailer also had some good dividend news-- it's doubling its quarterly payout to 10 cents a share. macy's also posted better-than- expected earnings-- first

quarter profits tripled to 30 cents a share, 12 cents higher than estimates, and it raised its profit forecast for the year. well, that sent shares vaulting to a 3.5-year high. macy's surged $2 to $28.36, a gain of nearly 8%, making macy's the best performer in the s&p 500 today. and a lot of talk about cisco systems-- after the bell the stock rose, then pulled back in after-hours trading even though the company reported better- than-expected earnings. looking at the numbers, cisco's earned 42 cents in its fiscal third quarter-- 5 cents more than analyst estimates. revenues rose 5% to $10 billion, in line with expectations. cisco shares surged 4.5% in after hours, but then sold off when cisco c.e.o. john chambers said he expects "weakness" in the current quarter.

he also expects job cuts. cisco has been struggling recently and restructuring its operations as it tries to cope with intense competition. and you can see the pain in this chart-- shares are off 12% year- to-date and the stock is down sharply from its high of $27.57 a year ago. and that's tonight's "market focus." it's wednesday, the night where you'll find our "street critique" segment every week.

before tom hudson left on assignment, he caught up with hilary kramer, getting her stock picks, and answering your questions. >> tom: investing always includes a certain amount of uncertainty. but with the spending debate in washington, questions about european government debt and efforts to slow down the red hot chinese economy, tonight's street critique guest is looking for the comfort in electricity and water, hillary kramer. always nice to see you. usually power and water don't mix like. this you like them both. first the swiss utility company abb, which does trade here in the united states under the same ticker symbol. a nice 50% rally over the past year. what do you think will power it from here? >> abb has contracts all over the world, and close to 20% of their sales come from china, india and some of the other south asian markets. tom, it's all about electricity transmission, efficient grid development, and you have countrys that need to build out their grid,

and others like the united states where it's falling apart. that's where abb comes in. and plus they're also a clean tech play because they help wind and solar integrate and hook up into the traditional electricity grid. >> tom: electricity, green and international. you also like water management, the french company here, it's been trending higher. but this is going to be a pretty volatile stock. it's seen a few 10% selloffs, right? >> right. it's one to hold for the long term in your portfolio, because you have this 4.5% dividend. this is also a european company. abb being based in switzerland, and vioela based in france, and it's water and it's water in china, all over the world, waste water, it's outsourced to them. but their contracts are 20 years in length, generally. what's happened to that as well as abb, even though their stocks have risen, they haven't kept pace with other engineering you till tess, because europe, and you're seeing overhang with investing

in europe, because so many concerns with getting greece and portugal, but these are companies that really aren't european, they're global, global companies. >> tom: just european based but have an international mix of business. some viewers requesting some updates from previous picks. i would like your recommendations on china nap ster and super media. let's take a look at china nap ster first, you liked it back on january 5 of this year, it's been down since then. >> well, china netstar is down with all of the china plays and that's because there's been a few really bad apples that have taken down the entire sector. i'm in china netstar for the long run because it's interesting, it's retail, it's a play on the chinese consumer. but let me tell you, china is tough, so it should only be a small part of anyone's portfolio. >> tom: super media was one that ted asked about and it gotten to about half the price when it was back when you first liked it last year. what's happened, and do you

still own it? >> super media i own. but anyone who bought it when i recommended it made money, 30% plus. and it trended up for quite a while before it headed back down. the problem there is this is the traditional yellow pages that the play here is the strategy is to go with the social media as well as to yellow pages online. it's not playing out as well as it should have, the market doesn't like it. it came out of bankruptcy. so it looks like it's not going to make it. i'm holding on because at this low a point, yet it's a revenue producing company, i might be holding a melting ice cube, but we'll see. >> tom: all right. you own everything we mentioned? >> yes, i do. >> tom: you can e-mail us of course at street critique at nbr.com, follow us and send us a note by twitter at our twitter, hudson nbr. hilary kramer, with game changer stocks.com.

>> susie: here's what we're watching for tomorrow: weekly jobless claims, and the april reports on retail sales and producer prices. also tomorrow, the big names in big oil are on capitol hill defending their big tax breaks amid rising energy prices. executives from exxon mobil, chevron, shell and b.p. are expected to attend the hearing. a 24-hour general strike in greece turned violent today, as workers protested the government's austerity plans. riot police used tear gas and stun grenades to break up mobs in central athens. workers are furious over planned wage cuts for public sector workers, and other spending reforms. greece's economy is in bad shape and will probably need a second bailout after burning through $158 billion in loans from the european union last year. an unusual turn today at the annual meeting of phillip morris-- the tobacco giant's c.e.o. said that while cigarettes are addictive and

harmful, it's not that hard to quit smoking. louis camilleri's comments then were blasted by the campaign for tobacco free kids as an irresponsible form of corporate double-speak. after the meeting, the company repeated only camilleri's claim that "tobacco products are addictive and harmful." in tonight's "money file,"

separating fact from fiction when it comes to social security. here's eric schurenberg, editorial director at cbsmoneywatch.com. >> judging from my inbox, most americans believe the following about social security. in 1983, congress rewrote the law to build a huge trust fund to tide the system over through the baby boom's retirement. but congress raided the fund, and now the system will go bankrupt. well, not really. first, there was never a plan to lay money aside for the boomers. the prospect never comes up in the '83 reform. remember, at that time, social security was on the brink of not being able to mail out checks, and the oldest boomer was under 40. lawmakers worried about the next decade, not about creating a piggy bank for the 21st century. the trust fund is a trillion- dollar unforeseen consequence. did congress raid the trust fund? well, raiding is a loaded word. by law, the trust fund has to be invested in treasury bonds, and

treasuries are issued to raise money for uncle sam. yes, the government spent it. it was supposed to. finally, social security is not going bankrupt. as long as voters are willing to tax workers to pay benefits to retirees, social security will survive. the real risk to you is that the support will stop, but we're a long way from that. i'm eric schurenberg. >> susie: and finally tonight, they say a picture is worth a thousand words-- maybe that should be a thousand calories. a new project in texas has cafeteria cameras photographing what students put on their lunch trays and what they later throw away. the snapshots will be digitally scrutinized to figure out how many calories each kid consumed. and the technology is so good, it can identify a half-eaten piece of fruit. the $2 million experiment is being paid for by the u.s. agriculture department. that's "nightly business report" for wednesday, may 11. i'm susie gharib.

thank you for watching. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: this program was made possible by contributions to your pbs station from viewers like you. captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org >> be more. pbs.