Business todayBy Times staff writer
© St. Petersburg Times
published July 10, 2002
IRS, JUSTICE DEPARTMENT SUE ACCOUNTING FIRMS: The government filed federal lawsuits Tuesday seeking documents from two major accounting firms detailing tax shelters they have promoted, part of a broader crackdown on arrangements done solely to escape taxes. The Justice Department, on behalf of the Internal Revenue Service, filed the lawsuits in Washington against KPMG LLP and in Chicago against BDO Seidman LLP. Government lawyers contend neither firm gave the IRS the documents it seeks for its investigation of tax shelters.
WORLDCOM SEEKS $3-BILLION FROM BANKS: WorldCom Inc.'s John Sidgmore, trying to stave off bankruptcy, said the telephone company is in talks with J.P. Morgan Chase & Co., Citigroup Inc., Bank of America Corp. and two "nontraditional" lenders about $3-billion in financing. Sidgmore said he expects proposals from one of the banks and one of the nonbank lenders this week.
MERCK DELAYS IPO: For the third time in less than two weeks, problem-plagued drug giant Merck & Co. has delayed the initial public offering for the Merck-Medco subsidiary it is trying to spin off. The delay, announced Tuesday night, came a day after reports that Medco, Merck's pharmacy benefit management business, reported $12.4-billion in revenues from 1999 through 2001 that it never received. Merck reduced the share price, offering as little as $18 a share today, investors said, from as high as $24 just two weeks ago.
SEARS MUST PAY $10.2-MILLION IN TIRE DEATH: Sears, Roebuck & Co. must pay $10.2-million to relatives of a man who died when a Firestone tire bought from the retailer failed and a sport-utility vehicle flipped, a Texas state court jury decided. The jury last week awarded $29-million in damages to the family of Terry Tripp, who was riding in a Chevrolet Blazer that rolled over in September 2000 after a Firestone Dueler APT-model tire failed. Jurors held Sears 35 percent responsible for the wreck and Bridgestone Corp.'s Firestone unit 65 percent responsible. Firestone settled with the family.
WATCHDOG GROUP SUES CHENEY, HALLIBURTON: A Washington-based watchdog group said Tuesday it is suing Vice President Dick Cheney, Halliburton Co. and auditing firm Arthur Andersen, alleging securities fraud and other violations. Cheney was chairman and chief executive of Halliburton, a Dallas oil services company, from 1995 to 2000. Ten Halliburton board members are also named in the lawsuit, which was to be filed in Dallas today by Judicial Watch. "We're seeking actual and punitive damages for allegations of securities fraud, for changing accounting practices and not advising the public of these changes," Judicial Watch chairman and general counsel Larry Klayman said Tuesday night in Miami.
GREENSPAN OPTS FOR SAFE INVESTMENTS: Federal Reserve Chairman Alan Greenspan, who tried to sound warnings about "irrational exuberance" long before the stock market bubble burst, stuck to his no-frills investment strategy during last year's recession. His financial disclosure report, released on Monday, showed that the Fed chairman, who can send markets soaring or plunging with a few well chosen words, is still avoiding stocks for the safety of Treasury securities and money market accounts. The value of Greenspan's holdings, given only in broad ranges in the disclosure report, totaled between $3-million and $6.2-million last year. The bottom range stayed about the same as in 2000 although the top was down from the 2000 report, which put the upper boundary of Greenspan's holdings at $9.6-million.
HAMPTON INN SOLD: A Lansing, Mich., investment group affiliated with HCR Properties Inc. paid $9.3-million to acquire the Hampton Inn Central at 21030 U.S. 19 N in Clearwater, according to Greene Canfield DeGeorge hotel brokers. The hotel was purchased from Menna Development and Management Inc.
S&P 500 ADDS SEVEN COMPANIES: Standard & Poor's will add seven companies to its 500-stock index, including Goldman Sachs Group Inc. and eBay Inc., replacing the non-U.S. members of the benchmark. United Parcel Service Inc., Prudential Financial Inc., Principal Financial Group Inc., SunGard Data Systems Inc. and Electronic Arts Inc. also will be added to the S&P 500. They will replace Royal Dutch Petroleum Co. of the Netherlands and Anglo-Dutch consumer products company Unilever NV, as well as five Canadian companies, Nortel Networks Corp., Alcan Inc., Barrick Gold Corp., Placer Dome Inc. and Inco Ltd.
VIVENDI SECURES LOAN: Vivendi Universal's creditor banks have agreed to a deal for short-term financing -- a first step in easing the media giant's cash crunch, a French newspaper reported Tuesday. Le Figaro said creditor banks granted a loan of 1-billion euros ($989.7-million). More negotiations are expected in coming days for a second loan of between 2.5-billion and 3-billion euros (between $2.47-billion and 2.97-billion), the newspaper said. Meanwhile, France's market watchdog announced Tuesday that it is investigating financial information provided by Vivendi since January 2001 and that its investigators have started to examine documents at the company's premises.
HARVARD BUSINESS REVIEW PUBLISHER RESIGNS: Penelope Muse Abernathy is resigning as publisher of the Harvard Business Review, three months after the publication's editor quit following disclosures about a personal relationship with former General Electric chief Jack Welch. Abernathy, publisher of the monthly business journal since 1999, is stepping down as part of an "extensive internal strategic review," Harvard Business School Publishing said Monday. HBSP spokeswoman Sarah McConville said there was no connection between Abernathy's resignation and her handling of the controversy involving Welch and former Review editor Suzy Wetlaufer.
GOLDMAN SIMPLIFIES STOCK RATINGS: Goldman Sachs Group Inc. became the latest securities firm to simplify its stock ratings after allegations from regulators that Wall Street research was tainted by conflicts with investment banking. Goldman will switch to three ratings from five beginning in the fourth quarter. The ratings will be "outperform," "in line" and "underperform." Securities firms are overhauling their research practices as New York State Attorney General Eliot Spitzer and the Securities and Exchange Commission investigate whether stock analysts produced favorable research, including "buy" recommendations, to win and retain investment-banking clients.
LOS ANGELES TIMES GETS NEW BUSINESS EDITOR: Rick Wartzman, a writer and editor at the Wall Street Journal's Los Angeles bureau, has been named business editor of the Los Angeles Times. Wartzman, 37, will replace Bill Sing, who becomes senior editor in charge of editing and creating special editorial sections for the Los Angeles Times.
TREASURY AUCTION: Bond prices rose Tuesday, as investors retreated from a falling stock market for the second day in a row. Yields on three-month Treasury bills were 1.71 percent as the discount remained unchanged at 1.69 percent. Six-month yields were at 1.73 percent as the discount fell 0.03 percentage point to 1.70 percent.
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