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An elaborate sideshow got underway in New York Tuesday, breathlessly described by prosecutors as the biggest U.S. insider trading case ever involving a hedge fund.

The defendant is Raj Rajaratnam, 53, cofounder of hedge fund Galleon Group LLC, whose assets peaked at about $7 billion (U.S.) before the roof fell in on global financial markets in 2008.

Rajaratnam is accused of reaping about $45 million in ill-gotten gains from tips provided to him by corporate insiders, 19 of whom have been convicted of securities-law violations.

Rajaratnam himself faces as much as 20 years

Sanofi-Aventis is buying specialty drugmaker Genzyme for $20.1 billion, the latest example of a beleaguered pharmaceutical company snapping up high-priced biotech drugs to offset dwindling sales of older, simpler medications facing generic competition.

Sanofi, the world’s fourth-largest drug maker, overcame Genzyme’s reluctance to a takeover by raising its previous offer to $74 per share and agreeing to make additional cash payments pending the success of several drugs.

Wednesday’s announcement comes after nearly nine months of back-and-forth between the two companies, with Sanofi-Aventis finally deciding Genzyme’s portfolio of rare disease treatments was worth adding an extra $5 a share to its original $69 per share offer.

Genzyme’s shares rose 80 cents, or 1 percent, to $75.10 Wednesday.

The combination seems odd at first: a huge French company best known for vaccines used by millions of patients each year, buying a Cambridge, Mass.-based biotech company whose drugs are taken by only a handful of patients around the world.

But experts say the merger reflects the landscape of the pharmaceutical industry, as companies seek to replace older medications that have lost their patent protection.

“There’s a view among a lot of the pharma companies that biotech companies are particularly helpful in addressing the conundrum of patent expirations,” said Adam Berger, managing director with investment bank Leerink Swann.

By the end of 2011, medications worth more than $30 billion in annual sales industrywide will begin competing with low-cost generic drugs. Many of these drugs, developed in the 1990s, treat common diseases like arthritis, diabetes and asthma. Sanofi’s blood thinner Plavix, the second-best selling drug in the world, loses patent protection in 2012.

Compared with these pill-based drugs, Genzyme’s high-tech injectable drugs are virtually immune to generic competition. Not only are they extremely difficult to manufacture, but they enjoy extra patent protections awarded to encourage development of specialty medications.

Genzyme’s drug Myozyme, for example, is the only treatment for Pompe Disease, an often-fatal disorder that affects fewer than 10,000 patients worldwide. A year’s supply costs $300,000 for adults. Other Genzyme treatments range from $100,000 to $300,000 per year.

Large pharmaceutical companies stayed away from these so-called orphan drugs for decades, in part because of the negative publicity associated with their high prices. Industry observers say that trend is likely to change.

“This is a starting point where we could see other companies that have specialty pharmaceuticals becoming more attractive to large pharma,” said Jim Prutow, a consultant with PRTM Management Consultants.

The drought of new products has already spurred a string of mega-mergers, peaking with the 2009 combinations of Pfizer and Wyeth, Merck and Schering Plough, and Roche and Genentech low interest personal loan.

“While the world was dealing with financial crises, credit contractions and lack of confidence, biopharma was doing deals at a record pace because of the acute need for new products,” Berger said.

Sanofi-Aventis CEO Chris Viehbacher launched his hostile takeover bid for Genzyme last October, only to meet stiff resistance from Genzyme’s founder and CEO Henri Termeer. The two sides eventually softened their positions, with Genzyme opening its books to share confidential data earlier this month, signaling a deal was near.

“Biotechnology had never really been embraced by Sanofi-Aventis in the past and I think that proved to be a weakness of the company,” said Viehbacher, at a news conference Wednesday at Genzyme’s headquarters.

Termeer will step down as chairman and CEO of Genzyme following completion of the deal, but will keep a consulting role as co-chairman with Viehbacher of an integration steering committee.

Genzyme’s best-seller Cerezyme treats Gaucher disease, an enzyme disorder that can result in liver and neurological problems. Its second-best seller, Fabrazyme, treats an inherited disorder known as Fabry disease, which is caused by the buildup of a particular type of fat in the eyes, kidneys and nervous system.

The deal gives Genzyme shareholders one “contingent value right” for each share owned. These CVRs give holders the right to cash payments based on Genzyme meeting certain goals, including raising production levels for Cerezyme and Fabrazyme, getting final FDA approval for multiple sclerosis treatment Lemtrada, and higher sales targets.

Founded in the 1980s with a dozen employees, Genzyme grew into a biotech powerhouse in the 1990s after launching Ceredase, the first treatment for Gaucher’s disease.

By 2008 the company employed 12,000 people and reported sales of $4.6 billion, but a series of manufacturing stumbles the following year left the company vulnerable to takeover.

In June of 2009, the company shut down its Allston, Mass.-based plant for about three months to clean up viral contamination that had been slowing production of Cerezyme and Fabrazyme. The virus was not harmful to people, but the shutdown was costly. Then, in November of 2009, the FDA said it found tiny particles of steel, rubber and fiber in drugs made by Genzyme.

By December, Genzyme’s stock had fallen to $48 per share, down nearly 25 percent from the previous year.

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Perrone reported from Washington, Keller reported from Paris.

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Newspapers are proving so resilient that the term

Canada risks losing the scientists and engineers needed to sustain its nuclear industry if the fate of Atomic Energy of Canada Ltd. remains uncertain, says the chief executive of Bruce Power.

Duncan Hawthorne told the Empire Club Thursday that the federal and Ontario governments should make it clear they

A majority of Americans are dissatisfied with the nation’s independent central bank, saying the U.S. Federal Reserve should either be brought under tighter political control or abolished outright, a poll shows.

The Bloomberg National Poll underlines the extent to which the central bank’s standing has suffered as it has come under fire in Congress, first from Democrats for regulatory lapses before the financial crisis and then from Republicans for failing to revive an economy in which the jobless rate hovers near 10 percent. Voters from both parties have criticized the Fed’s $3.3 trillion in aid to the financial system.

“The Fed had to do extraordinary things to keep us from going into a great depression, and the public doesn’t see it this way,” said Lyle Gramley, a former Fed governor who is now senior adviser at Potomac Research Group in Washington. “The last time we had any really severe criticism of the Fed was in the early 1980s, when the Fed was pursuing this brutally tight policy to keep inflation under control.”

The survey, conducted Dec. 4-7, also shows deep skepticism, especially among Republicans, over the Fed’s Nov. 3 announcement that it would buy bonds in an attempt to bring down unemployment and prevent deflation. More than half say the purchases won’t help the economy.

The policy, known as quantitative easing, was the target of criticism in Washington and overseas. That prompted Fed Chairman Ben S. Bernanke to appear in an interview on CBS television’s “60 Minutes” program on Dec. 5 to defend his actions.

Across the Spectrum

Americans across the political spectrum say the Fed shouldn’t retain its current structure of independence. Asked if the central bank should be more accountable to Congress, left independent or abolished entirely, 39 percent said it should be held more accountable and 16 percent that it should be abolished. Only 37 percent favor the status quo.

In a previous poll, conducted Oct. 7-10, 35 percent of Americans said the Fed should be radically overhauled, while 8 percent said it should be abolished.

Republicans and independents are more likely to support ending the Fed, with 19 percent of independents, 16 percent of Republicans, and 12 percent of Democrats wanting to do away with the central bank. Among those who identify themselves as supporters of the Tea Party movement, which wants to rein in government, 21 percent want to abolish the Fed.

Dual Mandate

The Fed was founded in 1913. While Congress sets its mandate, politicians let it determine how to achieve those goals through monetary policy and allow it to resolve differences of opinion among its seven board members and 12 Reserve Bank presidents.

Republicans in Congress have taken aim at the Fed’s dual mandate to achieve both maximum employment and stable prices. Last month, two Republicans, Tennessee Senator Bob Corker and Indiana Representative Mike Pence, proposed removing the employment mandate to focus the Fed on stable prices. Corker plans to introduce legislation next year.

That legislation would amend the Humphrey-Hawkins Full Employment Act of 1978, which created the Fed’s dual mandate.

Most members of Congress haven’t taken a hard look at the Fed in decades, said Representative Paul Ryan, a Wisconsin Republican in line to head the House Budget Committee. “They’re really beginning to wake up on this,” Ryan said in an interview.

Getting Politics ‘Out’

Pence, the outgoing chairman of the House Republican Conference, said his legislation doesn’t seek to abolish or politicize the Fed.

“Getting the Fed back to its original mission on price stability is precisely how we get politics out of monetary policy,” he said this week at a monetary policy forum in Washington.

Opponents of the central bank got another boost today when Representative Ron Paul, a Texas Republican and author of “End the Fed,” was picked to head the House Financial Services subcommittee that oversees the central bank. Paul said last week he is planning a series of hearings on U.S. monetary policy and wants to increase auditing of the Fed.

Senator Jim Bunning, a Republican from Kentucky completing his second term, called for restraints on the Fed in his farewell address today.

“Public awareness of what the Fed is doing is increasing while public opinion of the Fed is falling,” Bunning said. “Congress must act to rein in Chairman Bernanke and the Fed before they destroy our currency and permanently damage our economy and the financial system free business cards.”

Rare Appearance

Bernanke, 56, made his rare appearance on a nationally broadcast news program to explain his efforts to prop up a recovery so weak that only 39,000 jobs were created last month.

“We’re not very far from the level where the economy is not self-sustaining,” he said in the interview. “It’s very close to the border. It takes about 2.5 percent growth just to keep unemployment stable, and that’s about what we’re getting.” He said it’s possible the Fed will expand its bond purchases.

The Fed has said it would buy $75 billion a month of Treasury securities through June. That caused an uproar among Republicans, including Sarah Palin, the 2008 vice presidential nominee who says she’s considering a run for president in 2012.

Palin wrote to the Wall Street Journal last month, “it’s time for us to ‘refudiate’ the notion that this dangerous experiment in printing $600 billion out of thin air, with nothing to back it up, will magically fix economic problems.”

A ‘Myth’

Bernanke responded to such charges in his 60 Minutes interview, saying, “One myth that’s out there is that what we’re doing is printing money.” He added, “The money supply is not changing in any significant way.”

“The machinations of the Fed are not exactly a subject of water-cooler conversation — until newsmakers start talking about them,” said J. Ann Selzer, president of Selzer & Co., a Des Moines, Iowa-based firm that conducted the nationwide survey. “That talk has engendered a certain skepticism among the general public, many of whom may not see how this esoteric action by the Fed will ease their own pain.”

Fifty-four percent of those surveyed say the Fed’s policy won’t help the economy, compared with 25 percent who say it will. The remainder are unsure.

One poll respondent, Kathy Lipski, 34, said, “The Fed just has too much power or too much of a monopolized view, and I believe it needs some more oversight.” Lipski, who works for Honeywell International Inc. in Chicago, added: “It’s a good thing to have a separate entity as long as they’re acting in the best interest of the American people.”

Investors Skeptical

In a September poll of Bloomberg customers, investors were skeptical as well: Two in three said if the Fed were to ease monetary policy by buying bonds, it wouldn’t boost the economy, compared with one in three who were optimistic about the plan. By November, approval of the plan increased, with 41 percent optimistic and 56 percent saying it wouldn’t help.

The Standard & Poor’s 500 Index has risen 15 percent since Aug. 27, when Bernanke signaled the Fed’s willingness to begin a second round of quantitative easing during a speech in Jackson Hole, Wyoming. Investors’ expectations for inflation over the next five years have risen to 1.6 percent a year from 1.2 percent, as measured by the difference between the yields on inflation-protected and nominal bonds.

Still, the yield on 10-year Treasuries rose to 3.27 percent yesterday, the highest level since June, from 2.64 percent on the day of Bernanke’s speech.

Praising the Fed

Many observers have praised the central bank for steering the country away from the worst financial crisis in seven decades.

Fed officials “just did what they had to do to avoid a much more severe macro outcome,” said Roberto Perli, a managing director at International Strategy & Investment Group in Washington and a former Fed economist. “The Fed should quite frankly take credit for that.”

Bernanke personally is more likely to be viewed favorably than unfavorably. Thirty-four percent of respondents said they see him favorably, and 25 percent don’t. Forty-one percent said they weren’t sure.

He became chairman of the Fed in February 2006, after being appointed by President George W. Bush. He was renominated by President Barack Obama and confirmed for a second term in January 2010.

The Bloomberg National Poll is based on interviews with 1,000 U.S. adults age 18 or older and has a margin of error of plus or minus 3.1 percentage points.

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Any possible housing market recovery hit a snag during the three months ended September 30, as a government tax credit for homebuyers wound down.

Home prices fell only slightly during the quarter, according to a report from the National Association of Realtors (NAR), but the number of homes sold plummeted more than 25%, compared with the previous quarter.

The fall-off in sales volume remains a troubling feature of the current housing market scene because there’s rarely been a more attractive time to buy.

"Given the relationship between mortgage interest rates, home prices and median family income, the buying power in today’s market is matching the highest levels we’ve seen dating all the way back to 1970," said NAR President Ron Phipps.

Many sales were undoubtedly happened in early 2010 as homebuyers accelerated their purchases to qualify for the tax credit, which shaved as much as $8,000 off their tax bills.

Contracts had to be signed by the end of April to qualify and the deals had to close by the end of September.

The national median price for a single-family home sold during the quarter was $177,900, down 0.2% from the same period a year ago and up 0 no teletrack payday loan.6% from the second quarter of 2010.

Single-family home prices rose 2.5% to $253,400 in the Northeast, the only region that showed price improvement. Midwest prices fell 3% to $145,600, prices dropped 1.9% in the South and 0.4% in the West region.

The metro area with the biggest gain was Burlington, Vt., where the median price of $286,300 was 17.6% higher than 12 months earlier. The biggest loser was Ocala, Fla., down 20% to $82,200.

San Jose, Calif., recorded the highest median price — $628,700 — during the quarter, just nosing out Honolulu at $628,100.

Youngstown, Ohio, the old steel town, had the lowest median sale price, at $60,400.

Condo prices fared worse than those of single-family houses. The national median fell 3.9% from 12 months earlier to $171,400.

Palm Bay, Fla., had the biggest year-over-year loss: down 32% to $73,000; Jacksonville. Fla., was off 31% to $63,200. Phoenix condo prices also plunged, down 26.6% to $73,300.

Condo prices in the New York metro area soared, up 34.5% to $400,000, the most, by far, of any city. 

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3D Systems Corp. has purchased Provel, an Italian company that sells prototyping and manufacturing services.

Rock Hill-based 3D Systems paid $7.9 million for the company, which markets its services to automotive and durable-goods manufacturers. 3D Systems is obligated to pay an additional $4 million to the company in one year.

3D Systems also issued 85,612 of its common shares to Provel as part of the deal. The company’s stock was trading at $17.50 per share Tuesday morning. Its shares have traded between $8.14 and $17.96 during the last year.

3D Systems (NASDAQ:TDSC) produces machines that make three-dimensional prototypes and working parts for a range of industries, from plastics to auto racing.

Last week, the company announced it had acquired Bits From Bytes Ltd., a British manufacturer of three-dimensional printers for educational, hobbyist and professional applications.

Bits From Bytes makes and sells printers that range in price from $1,300 to $3,900.

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Suntech Power Holdings Co. Ltd. opened its first U.S. manufacturing facility in Goodyear on Friday, bringing solar panel assembly to the Valley.

The Wuxi, China-based Suntech (NYSE: STP), one of the largest solar module manufacturers in the world, began producing panels that were greeted by about 200 people at the company’s factory to celebrate the launch.

Shi Zhengrong, the company’s founder, chairman and CEO, said his firm has come a long way since it first began manufacturing panels in 2002, and it looks forward to developing more of a market in the U.S.

“Imagine what we will be able to do in the next eight years as we continue to drive down the cost of solar,” he said.

About 30 local workers along with a contingent of Chinese workers in the country temporarily to help the factory with its startup, were on the floor as the first panels began to roll off the line.

Suntech’s facility is the first module manufacturer in the Phoenix area and the first to open since the state passed a renewable energy manufacturing tax credit in 2009, known as Senate Bill 1403. The rebate was designed to help land solar manufacturers with plans to credit them for bringing in high-wage manufacturing jobs.

Gov. Jan Brewer, who attended the opening, said the tax credit program and a focus on renewables by the newly formed Arizona Commerce Authority are keys to revitalizing the state’s economy.

“The goal was to bring renewable energy to Arizona, and it is working,” she said.

Goodyear Mayor Jim Cavanaugh also credited the state law for the facility, adding the company was a good fit for the city, which is developing a more global environment.

“If it weren’t for 1403, we wouldn’t be here and Suntech wouldn’t be here,” he said.

Rhone Resch, president and CEO of the Solar Energy Industries Association, said he had a long relationship with Suntech and Shi, and that Suntech’s founder had said he would bring manufacturing to the U.S. when there was enough demand to merit it.

“Solar has a market,” Resch said. “It’s growing by 100 percent per year, and this year we have the fastest-growing market in the world.”

Suntech’s operations are capable of producing between 200 and 250 panels a day that will be destined for large solar power plants initially. The company has one production line and has the capacity to open a second line.

Officials with the company said they expect to hire another 30 people to further ramp up production sometime after the new year begins.

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Managing financial data is often a nightmare for small business owners. Most can’t afford pricey accountants, and few have the bookkeeping and organizational skills to do the job well themselves.

Enter InDinero, a startup taking aim at that problem.

The site, which founder Jessica Mah calls "the Mint.com for small businesses," offers business owners a dashboard for real-time financial tracking, modeling and forecasting. A snazzy visual interface helps hammer home the meaning of the numbers — like a "cash runway" gauge that shows how many months of financial fuel a company has in its tank.

A recent grad of venture firm Y Combinator, InDinero launched two months ago to glowing reviews and recently closed a $1 million financing round. The site has already attracted 4,000 business clients using the system to track $400 million — and Mah says it’s already profitable.

"More than three-quarters of our customers never used any accounting before," Mah said. "We expected other programs to be our biggest hurdle — instead, it’s combating inertia."

Mah is painfully familiar with the problem she is trying to solve. She launched her first business when she was 13 years old, and continued in the entrepreneurial vein throughout high school. Whether she was selling website templates on eBay (EBAY, Fortune 500) or running a server hosting site, the financial details were always a headache.

"I was generating a lot of revenue, but my margins weren’t good," Mah said. "Even though I knew that, I couldn’t figure out a way to solve my problems."

Mah tried to use accounting programs like Intuit’s (INTU) QuickBooks, but found them time-consuming and lacking details.

"I wanted to see, for example, how long my company could survive if my revenue dried up overnight," Mah said.

InDinero can show you that. Mah and her business partner, Andy Su, met in college at the University of California’s Berkeley campus. They started chatting about their problems with business accounting software, and expanded the discussion to other classmates who’d tried to launch companies.

The stories were the same: Entrepreneurs didn’t want to spend a lot of time on complicated software or daunting math fast cash. They wanted a quick way to see their finances at a glance. Mah and Su compiled the ideas and began building InDinero in March 2009.

"Twitter and Facebook are fun, but they don’t fix business problems," Mah said. "We wanted to create solutions."

Mah met with more than 50 accountants and business owners for tips, but the results weren’t encouraging.

"A lot of investors told us it would be really difficult because businesses want so many things," Mah said. "And it’s a finance application, which doesn’t sound very sexy."

The original plan was to create accounting software, but Mah and Su decided to instead create what they call "a real-time financial dashboard." They focused on the user interface, opting to start with clean graphics and worry about the gritty math details later.

Mah, a computer science graduate, said she built the site around "the idea of what the perfect bank will look like in the year 2100." Setup takes less than 3 minutes, and InDinero pulls in past transactions from businesses’ debit, credit and checking accounts.

The site displays graphs detailing how much is business is making, as well as how much it’s spending across categories like payroll and travel. Users can also see forecasts for their next 18 months, including the impact of events like hiring a new employee or increasig their Web server costs.

But unlike Mint.com, which relies on advertising to make money, InDinero isn’t completely free. Basic accounts come gratis, but businesses with more than 50 transactions a month will need to shell out $30 a month. An enterprise account, for companies with more than 500 monthly transactions, costs $100 a month.

InDinero is currently run by a five-person team — and they all live together in a Mountain View apartment. Mah hasn’t yet paid herself a salary.

She says she’d rather use profits to hire new employees. After all, she’s taken to heart the lesson her software illustrates: "Managing money is hugely important for small businesses."  

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Tesla Motors Inc. has shown potential investors "freaking bad ass" plans for electric SUVs, cabriolets and vans to follow its planned sedan.

The potential new models are shown in a road show given by CEO Elon Musk leading up to the expected $185 million initial public offering by the company on June 29. Toyota Motor Corp. has pledged to buy another $50 million in Tesla stock after the IPO.

"Freaking bad ass" is how he describes the variations on the Model S sedan the Palo Alto expects to start making in 2012 at the former New United Motor Manufacturing Inc. plant in Fremont. To see the Tesla IPO presentation click here.

Unlike the company's only existing electric car that it has actually delivered, the Roadster, the sedan and other models shown in the road show would be completely built by Tesla. The sports car body and frame is now produced by Lotus, whose British factory is closing for renovations before Tesla can produce its sedan, causing a gap during which the company will be delivering no cars.

Tesla last week discussed in a blog posting how it plans to build the sedan at the NUMMI plant.

If the Toyota-Tesla partnership proceeds as outlined, the companies could also be producing electric vehicles together in Fremont, with speculation centering on an all-electric version of the hybrid Prius.

Toyota's announcement last week that it plans to restart a plant in Mississippi to build Corollas has fueled further speculation that hybrid Prius manufacturing could happen at the plant the Japanese auto maker abandoned in April. The Mississippi plant had once been touted for Prius production as well.

To read more of the Business Journal's in-depth coverage of Tesla, click here.

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