The Financial Accounting Standards Board issued guidelines intended to prevent the kind of abuse of financing partnerships that helped trigger Enron's collapse. The rule on special-purpose entities requires that unless outside investors provide at least 10 percent of an entity's capital, up from 3 percent, the entity has to be included on a company's balance sheet. When Enron accountants determined that a special-purpose entity didn't meet the 3 percent standard, the company was forced to move large debts back onto its books and report a loss that led to its bankruptcy filing.
SEC Upgrades EDS Investigation
Electronic Data Systems received notice of a formal investigation by the Securities and Exchange Commission, company spokesman Jeff Baum said. In October, the computer services giant said the SEC started an informal inquiry into its slashed third-quarter earnings forecast and contracts to buy its own stock. The formal notice means the probe was authorized by a vote of the SEC commissioners and investigators may now subpoena witnesses.
A bankruptcy judge approved the disclosure statement for the reorganization plan being proposed by U.S. Airways, which filed for bankruptcy protection in August. The next step is for creditors to vote on the plan. The airline hopes to emerge from bankruptcy protection by the end of March.
Microsoft's corporate privacy officer, Richard Purcell, plans to resign at the end of March, the company said. Purcell, 53, plans to take some time off and "climb mountains," said Rick Miller, a Microsoft spokesman, adding that Purcell wants to stay involved in the industry debate over protecting privacy in the information age.
Wade Cook Financial agreed with creditors to be managed by a court-appointed trustee under Chapter 11 bankruptcy. The agreement reversed a judge's order to liquidate the money-losing stock-market seminar company, issued after Wade Cook, the company's chief executive, failed to provide testimony requested by creditors. The creditors asked the court Dec. 19 to force the company and its subsidiary, the Stock Market Institute of Learning, into bankruptcy, alleging that employees hadn't been paid back wages and that their health insurance was canceled after the company collected and kept premiums.
Ford was accused of withholding evidence regarding testing of its 15-passenger vans, which have been scrutinized by federal officials after numerous rollovers. Ford is accused of hiding evidence in a case involving the deaths of two passengers in one of the vans when it flipped on a Kentucky highway on July 5, 1996, lawyers for plaintiffs said. Ford denied allegations that it misled the court and has stood by the vans' safety. A trial is scheduled for Feb. 24.
Adelphia's founder, John J. Rigas, and six members of his family asked a federal bankruptcy judge to throw out a lawsuit accusing them of violating federal racketeering laws. Adelphia filed the suit July 24, seeking damages and asking the judge to freeze the family's assets until there was a full accounting.
New York City sued the owners of 15 Web sites that sell cigarettes, accusing them of orchestrating a tax evasion scheme that costs the city and New York state millions of dollars a year. The suit alleges that the sites sell cigarettes at sharp discounts to New York residents without alerting state tax collectors to the sales.
The president of MCA Records, Jay Boberg, resigned. Boberg, 44, held the post since 1995. Jimmy Iovine, who runs the Interscope Geffen A&M division, will oversee MCA, a unit of Vivendi Universal.
Dominion Resources will cut several hundred jobs over the next year, most by summer. The Richmond-based utility holding company said about 100 meter readers in Virginia will be laid off because the company is installing 500,000 additional automated electric meters. Other cuts will be aimed at reducing support positions in the firm's energy-generation and transmission departments and in vehicle maintenance.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers