Friday, May 13, 2005
Fannie Mae accounting investigators said they will indefinitely postpone reporting their findings because of evidence of more bookkeeping errors at the biggest U.S. mortgage finance company, the head of the probe said. "There are a lot of new issues, a lot of governance issues, a lot of internal control issues," said former U.S. senator Warren B. Rudman, who was hired to lead the independent accounting investigation. Rudman said in January that he intended to issue a report as early as this month. The probe has been particularly delayed by the review of information related to a Feb. 22 filing by the Office of Federal Housing Enterprise Oversight raising questions about the District-based company's internal controls, systems and journal entries related to amortization adjustments, he said.
Ex-Enron, Merrill Officials SentencedDan O. Boyle, a former mid-level Enron finance executive who was convicted last year, along with four former Merrill Lynch executives, of conspiracy and fraud related to the sale of barges, was sentenced by a judge to a prison term of three years and 10 months and a $320,000 fine. Robert S. Furst, a former Merrill executive, was sentenced to three years and a month in prison and $665,000 in fines and restitution. Federal probation officials had pushed for Furst and Boyle to serve double-digit sentences. The barge fraud "would appear to have been one of the smaller and more inconsequential frauds committed by these conspirators at Enron," the judge said.
MORE NEWSE-Trade Financial confirmed that it had made an unsuccessful stock and cash bid for rival online brokerage Ameritrade Holding. Ameritrade said it is not for sale.
First-time claims for unemployment benefits rose to 340,000, up 4,000 from last week, the Labor Department said. Claims are averaging 327,000 this year, down from the average in 2004.
Wal-Mart was asked by more than 50 U.S. lawmakers to disclose its wage statistics for congressional review. A group led by Rep. Rosa L. DeLauro (D-Conn.) wrote a letter to Wal-Mart chief executive H. Lee Scott Jr., saying they want to "further understand why Wal-Mart pays its women associates less than men."
Ford's credit rating was cut to the lowest investment grade by Moody's Investors Service, sparing the automaker a second downgrade to junk in a week. The ratings service said it reduced its assessment of approximately $175 million of Ford's debt two levels, to Baa3. Standard & Poor's cut its ratings of Ford's and General Motors' debt to non-investment grade last week.
The Federal Communications Commission will vote Thursday on rules that determine how customers of Internet-calling providers use 911 to reach emergency dispatchers.
The independent members of Walt Disney Co.'s board issued a strong rebuke to two former members who have challenged the process used to select Robert A. Iger as chief executive, rejecting what they call a challenge to "our good faith in the CEO selection." Former board members Roy E. Disney and Stanley P. Gold have sued some sitting board members over Iger's selection.
Maytag's chief executive defended a plan to move jobs overseas and possibly close the appliance maker's flagship plant in Newton, Iowa. Responding to criticism from shareholders at Maytag's annual meeting, chief executive Ralph F. Hake said he expects the Newton plant, which employs 1,200, to stay open at least until 2008. Separately, the company announced it would cut a quarterly dividend due June 15 by 50 percent, to 9 cents a share.
The New York Stock Exchange may increase its cash payment to members as part of its merger with Archipelago Holdings, chief executive John A. Thain said in a May 10 memo to members that Archipelago filed with the Securities and Exchange Commission. Under terms of the merger announced last month, each of the NYSE's 1,366 members will receive $300,000 in cash.
Massachusetts Secretary of State William F. Galvin issued subpoenas to four top Gillette executives after the personal care products company said e-mails about its pending $57 billion acquisition by Procter & Gamble may have been deleted. With the companies' shareholders scheduled to vote on the deal next month, Galvin has questioned whether P&G is paying too little for Gillette. The executives are Chief Financial Officer Charles W. Cramb; Vice Chairman Edward DeGraan; Peter Klein, manager of strategic and business development; and human resources manager Edward Guillet.
Krispy Kreme Doughnuts expects to release its overdue earnings report for the fourth quarter by the end of August, according to a terse statement posted on its Web site and then abruptly removed. Krispy Kreme's spokeswoman for investor relations, Robbin Moore, said she could not comment on why the statement was taken down or whether it was posted in error.
General Electric said subsidiary GE Consumer Finance would acquire a 49.99 percent stake in Panama's BAC International Bank to raise its presence in the Central American financial services market. The terms of the transaction were not disclosed.
Mark H. Swartz , Tyco's former finance chief, testified that $12.5 million in loan forgiveness he got in 1999 was the result of an amendment to a 1995 relocation program, not theft as the government charges. Swartz and former Tyco chief executive L. Dennis Kozlowski are on trial for fraud and larceny for awarding themselves bonuses. Swartz said he never reported his share of the 1999 forgiveness in company filings because he believed relocation loans do not have to be disclosed to shareholders.
Mortgage rates rose after falling for five consecutive weeks. Rates for 30-year, fixed-rate mortgages averaged 5.77 percent this week, up from 5.75 percent last week, Freddie Mac reported. Rates on 15-year, fixed-rate mortgages, a popular option for refinancing, rose to 5.33 percent from 5.31 percent, while one-year, adjustable-rate mortgages edged up to 4.23 percent from 4.22 percent.
First Data of Denver, owner of Western Union Financial Services, agreed to buy the nation's largest privately held money-transfer company for an undisclosed amount. Vigo Remittance of Sunrise, Fla., will become a part of the world's largest money-transfer company if the acquisition is approved by regulators. Vigo is popular among immigrants who send money to Latin America and the Caribbean and has 3,700 agent locations in the United States, including outlets in the Washington area.
UPS pilots gave their union authority to call a strike as mediated contract talks continue between the world's largest shipping carrier and the Independent Pilots Association. The vote does not mean a walkout is imminent, and pilots would get another chance to vote before actually striking. The two sides meet again Monday.
Sabre Holdings , the owner of online travel group Travelocity, said it has agreed to buy British rival Lastminute.com in a deal that values the company at $1.1 billion. Lastminute.com sells flights and vacations in 13 European countries.
The Securities and Exchange Commission renewed legal action against a former MFS Investment Management executive, accusing him of enabling his firm to profit from an illegal tip when the government terminated its 30-year bond in 2001. It alleges that Steven E. Nothern, who was an MFS senior vice president, received a tip from Peter Davis Jr., who pleaded guilty in 2003 to providing the information before its public release.
Berkshire Hathaway is paying more to sell debt on concern the company's ties to American International Group will hurt its credit rating. The extra yield investors demand to hold Berkshire Hathaway bonds over government debt has more than doubled since the company came under scrutiny by the Securities and Exchange Commission and New York Attorney General Eliot L. Spitzer.
Applebee's International shareholders rejected a proposal that the restaurant chain adopt a more humane way of slaughtering chickens. The proposal offered by People for the Ethical Treatment of Animals received less than 6 percent of the total votes during Applebee's annual meeting. The organization wanted the company's suppliers to kill the chickens by putting them to sleep with an inert gas.
Ronald O. Perelman's counsel told jurors in his closing argument that Morgan Stanley deliberately hid a fraud at its client, appliance maker Sunbeam, to collect on its $33 million in fees. Perelman, chairman of cosmetics giant Revlon, is suing Morgan Stanley for $2.7 billion in damages, alleging that he relied on the investment bank when he sold his camping-gear company Coleman to Sunbeam in 1998 for $1.5 billion, including Sunbeam stock.
TIAA-CREF named John Wilcox senior vice president in charge of corporate governance, effective immediately. Last week, a report commissioned by the company's board of overseers cited a series of "substantial missteps" by management. A spokesman said the retirement of Peter Clapman, whom Wilcox is succeeding, was planned and not a response to the report.
INTERNATIONALGermany's economy grew 1 percent in the first quarter, the strongest rate in four years, government statisticians said. The Federal Statistics Office said it expects the expansion to slow for the rest of 2005.
Italy's struggling economy plunged into recession in the first quarter as its gross domestic product shrank 0.5 percent, the country's national statistics office said. The decline followed a 0.4 percent drop in 2004's final three months.
LOCAL BUSINESSFreddie Mac said it would increase its 2004 income by $110 million after reducing its tax reserves under an agreement with the Internal Revenue Service. The McLean-based mortgage finance company had set aside reserves as it worked out a dispute with the IRS over tax deductions on dividend payments to holders of $4 billion of preferred stock in two real estate investment trusts formed in 1997.
An MCI investor holding about 3 percent of the Ashburn-based telecommunication company's 325 million outstanding common shares plans to withhold votes for the company's directors to protest MCI's $8.44 billion buyout by Verizon Communications. Leon G. Cooperman, chairman of Omega Advisors, a New York hedge fund, said MCI should have accepted a $9.75 billion bid from Qwest Communications International.
EARNINGSDell said first-quarter profit rose 28 percent, to $934 million. Sales increased 16 percent, to $13.39 billion.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.