BT Alex. Brown has agreed to pay $15.3 million in the largest settlement yet in the federal government's investigation of alleged price gouging and fraud in the municipal bond market. Under the agreement with the Securities and Exchange Commission, the investment firm also consented to an administrative order finding that its predecessor, Alex. Brown & Sons, defrauded Pennsylvania in a $494 million bond offering in March 1994. BT Alex. Brown, based in New York and Baltimore, is owned by Deutsche Bank of Germany through its takeover in June of Bankers Trust, the brokerage firm's parent since 1997.

The Commodity Futures Trading Commission voted unanimously to give U.S. futures exchanges freedom to offer new contracts without prior government approval, a step toward Chairman William Rainer's plan to deregulate the industry. The vote eliminates a regulatory barrier that required the Chicago Board of Trade and other exchanges to wait, sometimes for months, for the CFTC to approve new contracts and changes in existing ones.

Microsoft Chairman Bill Gates said he was open to "any sort of resolution" to the federal government's landmark antitrust case against the software giant. Gates's remark, in response to a question on ABC's "Good Morning America" on the possibility of a Microsoft breakup, appeared to fuel speculation he was making a slight but key shift in his position on the conditions of a settlement. Saying he would consider "any resolution" appeared to be a step beyond what Gates said in a recent interview in Time magazine, in which he did not rule out breaking up the company as a condition of settlement. He would not elaborate further.

Microsoft conceded defeat in a high-profile instant-messaging battle with rival America Online, saying that to continue the fight would leave users open to a serious security risk. The dispute between the two industry giants has been raging since July, when Microsoft, moving in on a hugely popular Internet phenomenon, unveiled free software that allowed users to send instant messages to one another or to users of America Online's rival system. Microsoft yesterday released Version 2.0 of its MSN Messenger Service, eliminating the interoperability with the AOL instant-messaging service.

Walt Disney shareholders approved the company's spinoff of its Internet assets into a separately traded online company called Go.com. The company also said shareholders of Internet search engine Infoseek, voting at a separate meeting, approved Infoseek's acquisition by Disney, paving the way for establishing Go.com.

Priceline.com plans to sell tickets for the three major airlines it does not already serve, United, American and US Airways, and will take a one-time, $1.1 billion charge related to the deal. Shares of Priceline increased by more than 13 percent after the announcement, trading at $77.62 1/2, up $8.87 1/2, after earlier touching a session high of $81.

EBay named Brian Swette to the new post of chief operating officer, freeing its president and chief executive, Meg Whitman, to focus on the Internet auctioneer's expansion. Swette will handle the day-to-day business of eBay's operating units. He had been senior vice president of marketing and general manager of eBay U.S.

Kimberly-Clark has named Thomas J. Falk as its president and chief operating officer, filling two jobs that had been vacant for more than seven years. Falk, 41, will oversee daily operations of the Dallas-based maker of facial tissues and other personal-care products. He will also join the board of directors.

Levi Strauss chief executive Philip Marineau is shaking up the jeans maker after six weeks on the job, announcing plans to replace top managers and continue blending U.S. and global functions. In a memo to employees, Marineau said that John Ermatinger, president of the Americas division, and Rob Holloway, vice president of marketing for the United States, will be replaced. Eight other top managers will either retire or have their duties changed.

INTERNATIONAL

Terra Networks saw its stock price rise as much as threefold in U.S. and European trading as investors clamored for shares of Europe's biggest publicly traded Internet company. The Madrid-based company's American depositary receipts rose to $38.25 in late trading from $13.41, after touching a high of $54.50. "There's a shortage of Internet companies in Europe," said Enrique Marazuela, chief investment officer at Aegon Union Aseguradora, who manages $62 million in European equities.

EARNINGS

Applied Materials reported fourth-quarter results that easily topped analyst forecasts, and it also forecast strong demand into next year. The world's largest maker of semiconductor-manufacturing equipment said that for the quarter ended Oct. 31, net income rose to $307.7 million, compared with a loss of $186.7 million a year ago. Sales nearly doubled, to $1.57 billion.

Hewlett-Packard posted higher fourth-quarter sales and operating income, but the giant computing company warned that it faced some business issues for which there would be no immediate fix. The company said net earnings from continuing operations--excluding results of its spun-off Agilent Technologies test and measurement business--totaled 75 cents per share, compared with 72 cents per share a year ago. Net operating income rose to $760 million from $710 million.

Talbots, a retailer of women's and children's clothing, said fiscal third-quarter earnings jumped 57 percent, to $20 million. The company credited higher-than-expected sales of its fall fashions, including knit tops and casual pants.

LOCAL BUSINESS

Dominion Resources of Richmond and four other utilities may be sued by Connecticut, which accuses them of skirting Clean Air Act rules demanding the installation of pollution equipment on 16 coal-fired power plants in five states. Connecticut Attorney General Richard Blumenthal said he also sent letters warning of a lawsuit to Allegheny Energy of Hagerstown; American Electric Power of Columbus, Ohio; Cinergy Corp. of Cincinnati; and FirstEnergy of Akron, Ohio. The companies have denied any wrongdoing.