>> tom: another round of insider trading arrests. the f.b.i. uncovers a $62 million scheme in an expanding investigation. >> the charges, at their core, describe a circle of corruption and a cycle of greed. >> susie: and the obama administration says no to the keystone oil pipeline, blaming a congressional deadline. the 1700-mile pipeline would bring canadian oil to the u.s. >> if we block that oil from coming in here, it's going to end up somewhere else eventually, and china is a real possibility. >> susie: it's "nightly business report" for wednesday, january 18.

this is "nightly business report" with susie gharib and tom hudson. "nightly business report" is made possible by: captioning sponsored by wpbt >> tom: good evening and thanks for joining us. seven people were charged today in a $62 million insider trading scheme. susie, they include a top hedge fund co-founder, financial analysts and a former dell employee. >> susie: tom, federal prosecutors called it "operation hedge fund." today's charges are part of an aggressive campaign by the u.s. attorney's office in manhattan to crack down on insider trading. these are the most prominent arrests since the conviction

last year of hedge fund heavyweight raj rajaratnam. he's now in prison serving an 11-year sentence. >> tom: what's interesting about this case is nearly all of the money was allegedly made off a single trade in dell stock. erika miller has details of the case and those accused. >> reporter: preet bharara is one of the nation's top federal prosecutors. the way he sees it, insider trading is rampant and routine on wall street. he called today's arrests a stunning portrait of organized corruption among a group of friends. >> the charges unsealed today describe a tight-knit circle of greed on the part of professionals willing to traffic in confidential business information, all to obtain an illegal inside edge over ordinary law-abiding investors. >> reporter: according to the government, a corrupt dell employee passed information about the company's upcoming earnings reports to a former colleague named sandeep goyal. goyal then allegedly tipped off

jesse tortora of diamondback capital who, in turn, tipped off hedge fund friends at level global and elsewhere. >> when the news was good, they went long. when the news was bad, they went short. >> reporter: the defendant getting the most attention today is jon horvath of sigma capital management, an affiliate of giant hedge fund s.a.c. capital. >> he clearly has an incentive to plea bargain for leniency. the only way you can plea bargain with the government is by giving up someone who is higher up in the food chain. >> reporter: already, goyal and tortora have pled guilty, as well as research analyst spyridon "sam" adondakis. all three are cooperating with the probe. today's announcement is part of a long-standing investigation into insider trading dubbed operation perfect hedge. the biggest conviction so far is hedge fund titan raj rajaratnum, who began serving an 11-year prison term last month. prosecutors made it clear today

their aggressive investigation into insider trading is continuing. as of today, over 60 people have been charged as part of that probe. erika miller, "nightly business report," new york. >> susie: joining us now with more insights on this case? david rosenfield. he's a former federal prosecutor on securities fraud and is now a white-collar criminal defense attorney at herrick, feinstein. hi, david, thank you for joining us. >> hi, susie, thank you. >> susie: so 62 million in illegal profit, a lot of top money managers. how important is this case? can you put it in perspective for us? >> it's a very important case. based on the amount of money that was allegedly made, $62 million in profits, that's right up there with the amount that raj made. the number of arrests, seven people were either arrested, three pled guilty. this is a huge case. it's part of a continuing ongoing investigation by the

government. you know, the train has stopped at this station, but the train is going to keep on going, there will be more stops. the government made it clear that this is going to go on and on and on, there are going to be a lot more insider trading investigations. >> susie: david, you've been on both sides of these kind of cases, as a federal prosecutor and also as a defense attorney. how do you think this one will play out? will we see convictions or settlements, jail time? >> well, i think that you very well may see some cooperation, because it looks as though based on reading the different articles and summaries that it could be a very strong case. there's e-mails, ahead of the release of the information that seemed to indicate that there was some insider trading going on. that could put some pressure on people to flip or cooperate. this is a case where there's no wiretap, but there's documents and there's cooperation that will put pressure on people to flip because if they're convicted, given the size of the profits,

$62 million, they could be facing years and years in prison. >> susie: once again, this case is going to have to deal with the whole definition of what is really insider trading, and we know that the hedge fund industry lives off of trading information. so what do you tell your clients, how do they know when they've crossed the line? >> well, what they can't do is trade in material, nonpublic inside information. what hedge fund clients do is they get a mosaic of information, that they're allowed to do. they can't cross that line into material nonpublic information. that a merger, an acquisition is occuring, or there there be a release of earnings reports. in this case on one trade alone they made $53 million. that's unheard of. they must have thought that information was pretty good to invest that kind of money, and make that kind of money. >> susie: so, what it the take away for individual investors about this case? do you think that these kinds

of charges and also convictions like in the raj case is making the marketplace much more fair for the individual investor? >> i think it has to. because when people talk in the industry on the phone, they got to think, am i being wiretaped. when they trade, is this trade going to come back to haunt me? i've got to believe that the amount of insider trading has got to level off and come down. people would be crazy to continue to commit insider trading violations in this scenario. i just think it's got to come down. >> susie: all right, well, we'll see what happens with that one. thank you so much for coming on the program. we really appreciate it. >> thank you, susie. we've been speaking with david rosenfield, white-collar criminal defense attorney at herrick, feinstein. >> tom: the obama administration today moved to block the controversial keystone x.l. pipeline. it would have brought oil from canada to the gulf of mexico.

republicans called the decision a job killer, while environmentalists applauded the protection of water supplies along the pipeline route. darren gersh reports from washington. >> reporter: the white house blamed the decision to block the keystone pipeline on what it called an arbitrary deadline for approval forced by congressional republicans. >> the republicans put in jeopardy a process that should be immune from politics. >> reporter: oil producers blasted the president for caving in to pressure from environmentalists, and republican congressional leaders promised to keep pushing for the pipeline. >> the american people are still asking the question, where are the jobs? and here the president's got an opportunity to create 20,000 direct jobs and over 100,000 indirect jobs, and he says no. >> reporter: most analysts expect the keystone x.l. pipeline will ultimately be built by shifting the route to avoid nebraska's sensitive sand hills water supply. a new route could also make it easier to transport oil produced

in the bakken formation in north dakota down to the gulf of mexico. >> it's going to have to find another route. i'm not sure where it will be diverted to or who will step in or what might happen to facilitate changing this decision. ultimately, that oil will have to get to the u.s. we need it and somehow it will get here, but we have a big hurdle to overcome. >> reporter: despite news the pipeline was in trouble, crude oil futures prices ended the day down slightly. traders were focused on the risk global demand is weakening, though keystone concerns aren't going away. >> it could really exacerbate some of the price moves we've seen. it's yet to be seen what actually will occur, but you know with the key pipelines being cut out of the picture it's going to have some impact longer term. >> reporter: the state department said transcanada could apply again for the permits to build the pipeline, but analysts at clearview energy partners argue the battle has already had one lasting impact on the oil industry. in the future, companies planning to build pipelines will

have to factor in a long and expensive political fight. darren gersh, "nightly business report," washington. >> susie: good economic and earnings news today gave a boost to stocks here on wall street. wholesales prices fell slightly last month, a sign that inflation remains tame. investors were also encouraged by better-than-expected quarterly earnings from goldman sachs. tom will have more on goldman's numbers in tonight's "market focus." the dow rose 96 points, the nasdaq added 41 and the s&p added 14, closing above the 1300 level for the first time since july. >> tom: still ahead, "street critique" guest bryan perry isn't afraid of the volatility earnings season can bring. he joins us with two new stock picks. >> tom: speaking of earnings season, let's call it "super thursday." that's for the large number of bellwether technology companies due to report earnings tomorrow. google, i.b.m., intel and microsoft all plan to turn in their fourth quarter corporate

scorecards, but expectations are for only so-so results for the tech sector. suzanne pratt explains why. >> reporter: it's hard to imagine there could ever be a period when tech companies weren't super-profitable. after all, technology touches almost every aspect of our lives, from the way we stay in touch to how we amuse ourselves. but, analysts believe earnings growth for most tech names cooled in the fourth quarter. and, there were some headwinds affecting those profits, all blowing from the same place. >> number one, weakness originating from and around europe. two, related currency headwinds. three, enterprises taking more time to sign and execute on deals. >> reporter: still, a stronger u.s. economy and decent holiday sales helped counteract some of europe's negative affects. but, when the numbers come, in profits for the sector likely rose just 1.6% in q4, that's

half of the expected gain for all companies in the s&p 500 index. on top of that an even tinier increase is expected for tech earnings in the current quarter. experts predict europe's problems will continue to plague tech companies this year. >> 2012 is going to be a harder year for the technology sector than 2011, especially because of the headwinds in europe and slowing developing markets. >> reporter: to be sure, at least a few companies might buck the trend and surprise to the upside with their fourth quarter numbers. analysts say priceline and google probably benefited from strong ecommerce sales, and apple earnings are also likely to shine. >> the reality is both the iphone and ipad seem to be tracking very well. p.c.s are gaining market share. so, we think apple will be proven a nice winner during q4.

the expected slowdown in fourth- quarter tech earnings has not yet hurt tech stocks. so far this year, the nasdaq is up about 6%, outpacing the broader market. analysts say that's due to attractive valuations and high hopes for earnings. suzanne pratt, "nightly business report," new york. >> susie: wikipedia, reddit, and an estimated 7,000 other websites went black today inesps il esott online picy bills moving through congress. the companies say two web piracy bills, known as sopa and pipa, could lead to censorship of the internet and even cause some websites to close. the proposals have caused a sharp divide between companies like these and content creators, who want better protections against online piracy. reddit general manager erik martin said many new media companies feel the legislation could hurt online innovation. >> this is a battle between not necessarily silicon valley, the

tech industry and hollywood, but people who really understand the internet and how it works and the potential it has and how to actually solve a problem like piracy, and people who don't. >> susie: some high-profile web companies didn't participate in the blackout, but still showed their opposition to the bills, tom. google was one. a black banner appeared over its search engine logo all day. and then late today, senator marko rubio and two congressmen pulled their support from the bill. >> tom: some big stakes here are being argued over. didn't hurt technology stocks, at least not today, as this debate continues. let's go ahead and get you updated with tonight's market focus. stocks caught a nice bid today, pushing prices up for the major indices to their highest level since july. the s&p 500 saw steady buying interest throughout the session, climbing on earnings news and

stronger signs from the housing market. with today's 1% gain, the s&p 500 index is back over the 1300 level for the first time since late july. it's up almost 20% since the october low. bank giant goldman sachs helped set the tone. while profits were down considerably from a year ago, its fourth-quarter earnings were much stronger than anticipated. revenues were the second lowest since the middle of the financial crisis. but the fact that goldman could still beat expectations pushed the stock up almost 7%. volume was heavier than usual. shares are at a six-week high. holding back the financial sector was trust banks. bank of new york reported disappointing earnings as fee revenues fell. it called it a "challenging revenue quarter." that hurt similar banks. state street dropped 6.5%. fee revenue also weakened last quarter at state street. northern trust fell almost 2% after its earnings came up short compared to expectations. but it was goldman's performance that topped the financial sector, making it the best stock

sector today, rising almost 2%. technology and consumer stocks did well too, up 1.6% each. helping consumer stocks was less pessimism among home builders. sentiment from that industry is at its highest level since 2007. k.b. homes and m.d.c. holdings jumped 7.5% each.t pulte group was up 6% to its highest price since june. while technology stocks rose as a group, the laggard was ebay, slipping ahead of reporting a solid fourth quarter. earnings came in three cents better than estimates, driven by its paypal and auction units, which saw double-digit jumps in revenue. however, the first quarter outlook was a tad shy of estimates. you can see the small loss during the regular session today, but after hours, shares gained almost 2%, putting it close to $31 per share. some analysts point out ebay has

a history of giving cautious guidance. driving technology today was semiconductor stocks. chip maker linear technology jumped 12% after a strong earnings report and a strong forecast. while some analysts think linear's strength is specific to it, we saw buying fellow chip companies altera and texas instruments-- up 10% and 9% respectively. one more from the world of high tech. tomorrow, apple is expected to announce a new strategy targeting the school textbook business. tonight, shares are at an all- time high. today's 1% gain was enough to put it over $429 per share. r.b.c. raised its target price to $525. from occupy wall street demonstrations to regulatory scrutiny, there has been plenty of debate over student loans. there's new speculation the obama white house may change how much a company's revenue may come from student financial aid. right now it's 90%, but it may be reduced. for-profit schools apollo group and devry fell on the rumors, down 6% and 3% respectively.

and that's tonight's "market focus." >> tom: europe may still be in trouble and earnings season has been mixed so far, but tonight's "street critique" guest is becoming more comfortable buying stocks. he's bryan perry, editor at cashmachine.com. bryan, welcome back, great to

see you again. >> thanks, tom. good to be with you. >> tom: what gives you the comfort now to put new money to work in the stock market? >> coming into earnings season there was a lot of companies that pretty much laid an egg. oracle missed estimates and the stock cast a pall on earning season because it's such a bellweather. intel warned about what they would be able to earn. currency exchange issues. and we saw a number of other stocks that, juniper also missed their numbers and the stock got hit hard storks the tone coming in for tech season was very subdued. and with that said, i think this is where you're starting to see some catchup now in some of these names like amazon and certainly apple is leading the way, but it's starting to broaden out. >> tom: you named a lot technology companies there. you've got a couple new picks tonight, begining with the regional financial, this has been a place where a lot of folks have looked lately, you like new york community nyw, the symbol.

what do you expect out of nyb? >> we're starting so see a big move in regional banks because they have limited sovereign if any sovereign debt exposure and you're starting to see the momentum for the jobs, so we're starting to get momentum in the psychology of household formation, small to medium sized business lending, and with the new york community bank that mays a 7.7% dividend yield that's just the high nest the sector, the stock trades at one times book and has a payout ratio of 87%. i look for the profit margins to increase from 37 tors to maybe 40, 45. >> tom: a big financial bull, especially with that dividend yield you like. cvr partners is another one, this company makes nitro general fertilizers, it came to the public market last april at 16, now it's at 27. still a rally ahead of it? >> very much. my target is 40 a share between now and the end of the year. fertilizers stocks are volatile, tom, but bear in

mind that the number one input that goes into making fertilizer which is used for growing corn is natural gas, and natural gas prices are 2.47. just a screaming low on natural gas. while fertilizer prices are pressing to new highs, new record highs. so your profit margins are expanding and the stock pays about an 8.5% quleeld here. we've made very good money in fertilizer sector, especially those that pay these yields are 9%. >> tom: we're short on time. do you own positions in these two stocks? >> i do, full disclosure, yes. >> tom: great to see you. our guest this evening, bryan perry, editort cashmachine.com. >> susie: let's check now on what we're watching for tomorrow. weekly jobless claims are due out, along with housing starts for december, and we'll see the latest on consumer prices. also tomorrow? natural gas prices are at a decade low. that's good news for companies paying to power their businesses, but it's bad news for nat gas producers. bank of new york mellon has

reached a settlement with the justice department. the upshot? the bank now has to tell customers how it decides exchange rates on foreign currency transactions. in october, a federal lawsuit accused the bank of offering "unfavorable" rates. the suit claimed the bank offered customers "above average" exchange rates and cashed in on the difference. >> tom: citigroup has a settlement of its own with a separate watchdog. industry regulator finra fined citi's global markets group $725,000 for failing to disclose conflicts of interest in analyst reports published between 2007 and 2010. those reports often are used by big and smalinvestors to make investment decisions. citigroup says it began working on improving its disclosures before the finra inquiry and continues to do so. >> susie: you've probably been finding tax forms in your

>> susie: you've probably been finding tax forms in your mailbox-- a sign that the april tax deadline is getting close. tonight's "money file" tackles the forms you need to watch for. here's karen gibbs, founder of the "gibbs perspective." >> don't look now, but tax season is just around the corner.

while you'll have two extra days to file your taxes, thanks to april 15 falling on a sunday, there are some things you should look for by the end of this month. if you are working, your employer is required to mail your w2 form detailing your annual wages, salaries and tips paid, as well as amounts of federal, state, social security and medicare taxes withheld no later than january 31. if you are an independent contractor earning $600 or more per year, you should receive form 1099-misc. if you received interest on financial deposits or investment dividends, look for forms 1099- int and 1099-div. did you receive a distribution from pensions, annuities, profit-sharing or i.r.a. plans? if so, look for form 1099-r. and lastly, i.r.s. form 1098 details real estate taxes and interest paid on mortgages. if you need an extension, filing form 4868 will give you until august 15 to file your taxes.

you can get an extension if you pay part or all of your estimated income tax due by using a credit or debit card, but your payment must be at least $1. i'm karen gibbs >> susie: and finally tonight, for 100 years l.l. bean boots have been keeping feet warm and dry. now, they've grown to legendary proportions. the l.l. bean bootmobile rolled into times square today to mark the 100th anniversary of the american clothing maker from brunswick, maine. the 13-foot high, 20-foot long boot-mobile is based on "the maine hunting boot," the company's first product. and tom, as part of its anniversary celebration, bean is teaming with the national park foundation to encourage americans to get outside and visit the nation's parks. that's "nightly business report" for wednesday, january 18.

i'm susie gharib. good night everyone and good night to you too, tom. >> tom: good night susie. i'm tom hudson. good night everyone. we hope to see all of you again tomorrow night. "nightly business report" is made possible by: captioning sponsored by wpbt captioned by media access group at wgbh access.wgbh.org sm