Cayman Islands bank secrecy has been cracked, federal officials said, with the help of a former bank owner. John M. Mathewson, 71, who was sentenced in federal court yesterday on conspiracy and money-laundering charges, provided records that show that the approximately 500 banks in the tiny British colony exist only to serve as illegal tax shelters for a mainly American clientele. Mathewson's attorney said the United States has recouped $50 million in back taxes and penalties and can expect to get a total of $300 million. An FBI agent said the bureau, working with the Internal Revenue Service, is pursuing 1,500 potential cases of Caymans-related tax fraud.
Tougher regulations for electronic stock trading systems, which have been luring business away from traditional stock markets, have been proposed by Sen. Charles E. Schumer (D-N.Y.). ECNs, short for electronic communications networks, are unfettered by the heavy regulatory costs of markets such as the New York Stock Exchange and Nasdaq, which spend more than a quarter of their budgets on policing their members. Schumer suggested any ECN that trades more than 5 percent of the volume of a stock should bear the same responsibilities as a stock exchange.
Federal regulators reported that 99 percent of the nation's banks, thrifts and credit unions have completed testing for the year 2000 bug in their computer systems. The regulators said most financial institutions already are using Y2K-compliant computer systems every day without problems. Last week, Fed Chairman Alan Greenspan said in congressional testimony that banks will be the safest place for people to keep their money at the end of the year.
A former analyst at Morgan Stanley Dean Witter was charged with participating in an illegal insider trading plan that generated $54,000 in profits for him and a longtime friend, federal authorities said. Brett S. Henderson, who worked in Morgan Stanley's Menlo Park, Calif., office, provided nonpublic information about the firm's clients to a friend, Richard F. Randall, who then traded on the information through his brokerage account, the SEC said.
An executive of UnitedHealth Group has been accused by the Securities and Exchange Commission of making more than $274,000 through illegal insider trading while United was negotiating to acquire MetraHealth in 1995. The government alleges that Michael Mooney, now the company's senior vice president for health care and economics, had nonpublic information about the merger plan when he purchased options to buy company stock. Mooney, of Prior Lake, Minn., denied the allegations through his attorney.
Procter & Gamble said it is experimenting with tying its commissions to advertising agencies to sales of the P&G products they help sell. The experiment comes as P&G, which makes Tide detergent, Oil of Olay cosmetics and Crest toothpaste, is cutting costs by closing plants and laying off workers to free up money to develop and promote new products.
Pharmacia & Upjohn, maker of anti-anxiety drug Xanax, agreed to buy a 5.4 percent stake in NeoPharm for $8 million, boosting the bio-pharmaceutical company's cash for conducting anti-cancer research. Pharmacia bought 452,861 NeoPharm shares at $17.67 each, a 21.8 percent premium based on Friday's closing price. The stock sale was triggered by the transfer of two NeoPharm anti-cancer agents to Bridgewater, N.J.-based Pharmacia.
Time Warner named Barry Meyer chairman and chief executive of its Warner Bros. movie and TV studio, replacing the departing Robert Daly and Terry Semel. Meyer is now executive vice president and chief operating officer of Warner Bros. Alan Horn, chairman of Castle Rock Entertainment, was named president and chief operating officer of Warner Bros.
T-bill rates rose. The discount rate on three-month Treasury bills auctioned yesterday rose to 4.695 percent, from 4.535 percent last week. Rates on six-month bills rose to 4.750 percent from 4.520 percent. The actual return to investors is 4.831 percent for three-month bills, with a $10,000 bill selling for $9,881.30, and 4.947 percent for a six-month bill selling for $9,759.90. Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 5.07 percent last week from 4.98 percent the previous week.
SBC Communications can expect an FCC ruling on its proposed purchase of Ameritech by "early fall," said the agency's chairman, William E. Kennard. SBC, Ameritech and the Federal Communications Commission staff in June proposed conditions that have to be met before the acquisition is approved. The conditions are aimed at opening the companies' local phone markets to new rivals and promoting access to high-speed Internet connections.
Yahoo is considering the buying its rival Excite At Home in a deal that could significantly extend its market leadership and enable it to offer new services, Business Week Online reported. The report, citing unnamed sources, said the Internet portal companies have held preliminary talks over the past six weeks.
Toys R Us named industry veteran John Barbour president and chief executive of its online unit, Toysrus.com, effective later this month. Barbour, 40, is president and chief executive of Hasbro's OddzOn division.
General Motors was forced to close light-truck assembly plants in Linden, N.J., and Shreveport, La., while officials determined the source of leaking brake fluid.
Amerigroup of Virginia Beach acquired Prudential HealthCare's Medicaid business in the District, taking over HMO coverage of 12,000 Medicaid recipients. Amerigroup said the beneficiaries do not have to change doctors and there is no change in benefits. In June the company took over coverage from Prudential of 80,000 Medicaid beneficiaries in Maryland.
Newport News Shipbuilding workers began returning to work after a four-month strike ended with a contract ratification vote Friday. The contract provides a pay raise averaging $3.10 an hour over 58 months and improves the pension plan for workers who retire at 62 with at least 30 years' experience.
Dominion Resources said it has agreed to sell its Latin American power-manufacturing businesses to Duke Energy International for $405 million. Richmond-based Dominion, which is the parent company for Virginia Power, is disposing of its Latin American assets to focus on growth in markets in the U.S. Midwest and Northeast as competition in the utility industry gets underway, said Chairman Thomas E. Capps.
U.S. Foodservice of Columbia, the second-largest food service distributor in the nation, said it has nearly completed an agreement for the acquisition of Greensburg, Pa.-based Parkway Food Service for an undisclosed amount. U.S. Foodservice markets and distributes more than 40,000 national, private-label and signature brand items to more than 130,000 customers.