SYDNEY: The global financial company Citigroup was cleared Thursday of insider trading and conflict-of-interest charges in Australia, in a case that challenged measures used by investment banks around the world to separate their share trading and corporate advisory departments.

Judge Peter Jacobson rejected allegations by the Australian governments corporate regulator that Citigroup broke the law when it bought and sold shares in a company that was also a takeover target for another company the bank was advising.

The judge also rejected the regulators charge that actions stemming from a traders conversation with his boss during a cigarette break on the street amounted to insider trading - and by extension that so-called corporate Chinese walls do not work.

The civil case, the first of its kind in Australia, was closely watched by regulators and investment banks around the world.

It was considered a test case on conflict-of-interest laws and the effectiveness of Chinese walls, which separate a brokerage firms trading activities from its corporate advisory and finance operations.

Citigroup and investor groups welcomed the ruling, saying it removed uncertainty that had been hanging over the industry..

But other analysts said the ruling raised concern that the law still allowed suspect practices to occur.

“It is certainly an enormous setback for the regulator, which staked its reputation in taking a case which had a strong moral foundation but a weak legal one,” said Justin OBrien, an expert in corporate governance and ethics at the Australian National University.

The Australian Securities and Investment Commission, which launched the case, did not immediately comment on the ruling.

The case centered on two Australian transport logistics companies and a single days trading.

Citigroup was advising one of the companies, Toll Holdings, on the possible takeover of the other, Patrick Corp.

On August 19, 2005, a Citigroup trader, Andrew Manchee, bought more than 1 million Patrick shares, helping to drive the price higher, the court heard.

Manchees supervisor, Paul Darwell, then invited Manchee to join him for a cigarette outside, where he told Manchee to stop buying Patrick shares. When he returned to the office, Manchee sold 193,000 Patrick shares before trading closed.

The next business day, Toll launched a hostile $5 billion bid for Patrick.

The regulator alleged that Darwell had supposed that Citigroup was advising Toll after hearing a comment from another executive, Malcolm Sinclair. Citigroup argued there was no evidence that important information had crossed from Sinclair to Darwell, and then to Manchee.

The regulator alleged that Darwell and Manchees actions were clumsy attempts to resolve a conflict of interest, and that Citigroup did not have adequate measures to deal with the situation.

Central to the regulators case was its claim that Citigroup had a fiduciary relationship with Toll that obligated the bank to get permission from the company before trading in Patrick shares.

Citigroups defense was that the letter of engagement Toll used to hire Citigroup as its adviser “specifically excluded the existence” of a fiduciary relationship.

“The court held that the law doesnt prevent an investment bank from contracting out of a fiduciary capacity; whether it should be able to do so is a matter for the legislature, not the courts,” Jacobson said.

He added that the insider trading charges failed because Manchee could not be considered an officer of Citicorp under the Corporations Act, and that Citigroups measures to prevent key information being communicated were adequate under the law.

Citigroup said in a statement that it “looks forward to continuing to work with ASIC and the industry to develop and uphold a well-regulated market for financial services in Australia.”

SAN FRANCISCO: Silicon Valleys math is getting fuzzy again.

Internet companies with funny names, little revenue and few customers are commanding high prices. And investors, having seemingly forgotten the pain of the first dot-com bust, are displaying symptoms of the disorder known as irrational exuberance.

Consider Facebook, the popular but financially unproven social networking site, which is reportedly being valued by investors at up to $15 billion. That is nearly half the value of Yahoo, a company with 38 times as many employees and, based on estimates of Facebooks income, 64 times more revenue. Google, which recently surged past $600 a share, is now worth more than IBM, a company with nine times more revenue.

More broadly, Internet start-ups are drawing investment based on their ability to build an audience, not bring in revenue - the very alchemy that many say led to the inflating and undoing of the dot-com bubble.

The surge in the perceived value of some start-ups has even surprised some entrepreneurs who are benefiting from it.

A year ago, Yahoo invested in Right Media, a New York company developing an online advertising network. Yahoos investment valued the company at $200 million. Six months later, when Yahoo acquired Right Media outright, the purchase price had swelled to $850 million.

What changed? According to Right Medias co-founder Brian OKelley, very little, except for the fact that Yahoos rivals Microsoft and Google were writing billion-dollar checks to buy online advertising networks, and Yahoo felt that it needed to pay any price to keep up.

“I have to say I giggled,” OKelley, 30, said of Yahoos acquisition, which earned him $25 million. “There is no way we quadrupled the value of the company in six months.”

The trend is described as a return to madness by skeptics or as a rational approach to unlimited opportunities presented by the Internet by true believers. Greed, fear and a desperate rush to pick the next big winner are all adding fuel to the fire that is Silicon Valleys boom.

“Theres definitely a lot of betting going on, and its not rational,” said Tim OReilly, a technology conference promoter and book publisher.

OReilly, who is credited with coining the phrase “Web 2.0,” said he thought that Silicon Valley was creating a new set of society-altering tools. But that has not stopped him from worrying that the industry is now minting too many copycat companies, half-baked business plans and overpriced buyouts. When the bubble inevitably pops, he said, “there are going to be a lot of people out of work again.”

Putting a value on start-ups has always been a mix of science and speculation. But as happened in the first dot-com boom and the recent surge in housing, seasoned financial professionals are seemingly indulging in some strange instinct to turn away from the science and lean instead on the speculation.

This time around, people indulging in that optimistic thinking are not mom-and-pop investors or day-traders but venture capitalists whose coffers are overflowing with money from university endowments and hedge funds. Many of those financial professionals say everything is different this time.

More than 1.3 billion people around the world now use the Internet, many with speedy broadband connections and a willingness to immerse themselves in digital culture. The flood of advertising dollars to the Web has become an indomitable trend and a proven way for these new start-ups to make money, while the revenue models of the dot-coms of yesteryear were often little more than sleight of hand.

“The environmental factors are much different than they were eight years ago,” said Roelof Botha, a partner at Sequoia Capital and an early backer of YouTube. “The cost of doing business has declined dramatically, and traditional media companies have also woken up to the opportunities of the Web. That does open up the aperture for a different outcome this time.”

Some trace the start of the new bubble to eBays $3.1 billion acquisition of the Internet telephone startup Skype in 2005. EBays chief executive, Meg Whitman, reportedly outbid Google for the company. EBay acknowledged this month that it had overpaid for Skype by about $1.43 billion, and Niklas Zennstrom, a Skype co-founder, left the company.

Googles acquisition of YouTube last year for $1.65 billion, under similarly competitive bidding, may have accelerated the transition to loftier values. Google executives and many analysts argued that YouTube was well worth the price tag if it became the next entertainment juggernaut.

It still might. More than 205 million people visit YouTube each month, according to the research firm ComScore. Still, Citigroup recently estimated that YouTube would bring in $135 million in revenue next year. At that rate, the number of videos watched on the site would have to grow 1,642 percent before YouTube accounts for just 5 percent of Googles revenue.

BERLIN: Apple said Tuesday that it had signed France Tйlйcoms wireless unit, Orange, to be the U.S. companys exclusive seller of the iPhone in France, agreeing for the first time to sell a version of the device that consumers can use on any network.

The move, which ended a month of speculation, is a concession to a French law that forbids bundling the sale of a mobile phone and a mobile operator. Orange plans to sell both a version of the iPhone locked to its network in France for \399, or $560, and an unlocked version, which will cost more, an Orange spokeswoman, Bйatrice Mandrine, said.

Mandrine said the cost of the unlocked version of the iPhone, which is being sold in the United States locked to the network of its exclusive sales agent, ATT, as well as the length of the French service contract for the \399 version, will be announced in November.

Apple last month signed exclusive agreements to sell the iPhone in Britain with O2, the wireless unit of Spains Telefуnica, and in Germany with T-Mobile, a unit of Deutsche Telekom. But speculation that the iPhones introduction to France was in jeopardy began mounting after the Apple chief executive, Steve Jobs, bypassed an Apple users convention in Paris after making appearances introducing the device in London and Berlin.

Apple, based in Cupertino, California, then declined to confirm remarks that the France Tйlйcom chief executive, Didier Lombard, made to journalists on Sept. 20 that Orange had won the iPhone contract. Mandrine said the agreement to sell the iPhone had been reached when Lombard made his statement, but that the companies had delayed an announcement until Tuesday as they finalized the commercial terms of the agreement.

“This did not have to do with locking or unlocking the phone,” Mandrine said. “It was about finalizing the commercial agreement.”

The pact with Orange gives Apple an exclusive sales agent for its the iPhone in Europes three largest markets.

Mandrine declined to say whether Orange had agreed to give Apple a portion of the service revenue that iPhone users will generate with the device in France. Analysts have said Apple is receiving up to 30 percent of operator revenue for the phone, something unheard of in an industry that has been dominated by operators.

Some industry experts said Apples negotiations in France had likely been held up by the companys demand for a slice of revenue.

“For operators, having an handset maker suddenly demand a slice of their revenues is like being asked to change your religion,” said Gerry Collins, the director of strategic marketing at Nortel Networks, a Canadian company that makes wireless phone networks. “This is really a significant change for the industry.”

Jean-Marc Dupuis, the vice president of European and U.S. sales at Creative Labs, a maker of mp3 players and a competitor to Apple, whose iPhone device includes the iPod mp3 player, said Apple is a company that aggressively pursues its own market strategy.

“This is Apple,” Dupuis said. “If you look at their strategy, they run the show the way they think it ought to be run.”

Apples agreement with Orange was a further sign that previous French legal concerns over the U.S. companys business practices - including Apples use of digital rights management controls to bind iPods to its own iTunes online music exchange in France - would probably not hinder the companys sales in Europe. Although French lawmakers passed a law targeting Apples iPod-iTunes strategy, the law has so far not hindered Apples operations in France.

“We are excited to partner with Orange and bring iPhone to France in time for the holidays,” Jobs said in a statement.

Apple had been tight-lipped about its plans in France. Asked for details on the situation, Alan Hely, Apples chief European spokesman, wrote in an e-mail message this week: “As you know, we have launched iPhone in the U.S.A. and we have set the launch date for the U.K. and Germany as 9 November. We have not announced any other country launch dates in Europe.”

Many analysts had believed that Apple had been stymied by a law passed in 1998 barring network operators from locking new devices to a network for more than six months.

Philippe Achilleas, a professor of telecommunications law at the University of Paris, said it was unlikely that Apple would succeed in circumnavigating the prohibition. He added that mobile operators were also not likely to seek a change in the law, as they are trying to rebuild their image after a December 2005 decision to fine the three largest mobile operators for conspiring to fix prices.

Katrinn Bennhold contributed reporting from Paris.