Former HealthSouth chief executive Richard M. Scrushy asked a judge to throw out three charges under the 2002 Sarbanes-Oxley Act, the corporate reform law, saying the act is unconstitutionally vague and makes it difficult for corporate officers to tell whether they're breaking the law. Scrushy is accused of making millions of dollars in a conspiracy to inflate HealthSouth's earnings. A Justice Department attorney said the law is clear and a chief executive can talk to subordinates to make sure the figures contained in statements he is signing are correct. The defense also asked U.S. District Judge Karon O. Bowdre to pare down the 85-count indictment against Scrushy. Bowdre indicated she had concerns that some of the counts against Scrushy were repetitive.
Four Hedge Fund Managers Sued
The Securities and Exchange Commission sued four Beacon Hill Asset Management hedge fund managers, accusing them of defrauding investors by wrongly calculating the value of the funds to conceal more than $300 million of losses in 2002. In an addendum to its original lawsuit, the SEC sued John D. Barry, Thomas P. Daniels, John M. Irwin and Mark Miszkiewicz on civil fraud charges, and named their wives as relief defendants.
The top telecommunications official for President Bush urged the Federal Communications Commission to delay as long as possible increasing the rates that long-distance phone companies pay to use local-phone networks. The interim rate rules should "include the maximum legally sustainable transition period without wholesale rate increases," Michael D. Gallagher, acting assistant secretary for communications and information in the Commerce Department, wrote in a letter to FCC Chairman Michael K. Powell. They "should cover a full year, unless superseded by permanent rules," Gallagher wrote.
Arthur Andersen's criminal conviction for obstructing the U.S. government's investigation of the collapse of Enron and a $500,000 fine were upheld by the U.S. Court of Appeals for the 5th Circuit, a court clerk said. Andersen, Enron's longtime auditor, was accused of shredding documents to keep them from federal investigators. In their appeal, Andersen's lawyers complained about evidence the judge chose to allow. The appeals court said the judge had the discretion to bar the evidence. It added, "We are not persuaded that this conviction is flawed by reversible error."
Tyco International's compensation committee knew that Mark A. Belnick had $15 million in no-interest company loans when they approved the general counsel's 2002 employment agreement, the committee's former chairman testified at Belnick's larceny trial. Prosecutors say L. Dennis Kozlowski, then Tyco's chief executive, gave Belnick the money to buy his silence about alleged fraud.
Network Associates' former chief financial officer, Prabhat K. Goyal, was charged by a federal grand jury with scheming to overstate the software manufacturer's earnings and revenue. The indictment charges him with 20 counts of securities fraud and conspiracy, the Justice Department said.
National Century Financial Enterprises' former vice president Sherry Gibson was sentenced to four years in prison for her role in the collapse of the now-defunct Dublin, Ohio-based health care financier. She pleaded guilty in August to conspiring to commit securities fraud. The District's Greater Southeast Community Hospital and Hadley Memorial Hospital were among more than 30 health care institutions forced into bankruptcy at least in part because of National Century's collapse.
Sprint plans to eliminate up to 1,100 jobs because of a decline in calling prices. About half the cuts will be at the long-distance phone company's Kansas headquarters. Sprint has announced the reduction of 4,650 jobs, or 7 percent of its workforce, since November.
Microsoft lost a contract with the Munich city government to the free Linux software. The switch from Windows, which affects 14,000 computers, will be the biggest PC defection to Linux ever, according to an analyst at Pacific Crest Securities.
An energy fund run by Carlyle Group and Riverstone Holdings, with Capital C Energy, agreed to buy oil and gas producer Belden & Blake from Texas Pacific Group for an undisclosed sum. Belden & Blake had 2003 year-end reserves totaling 360 billion cubic feet of natural gas equivalent in the Appalachian and Michigan basins, Carlyle and Riverstone said.
EMI overtook rival Sony Music in 2003 to become the world's second-largest record company, boosted by sales in the United States. The worldwide market share of London-based EMI rose to 13.4 percent last year from 12.2 percent in 2002, according to the International Federation of the Phonographic Industry. Sony Music fell to 13.2 percent from 13.8 percent.
Standard & Poor's raised its rating of Qwest Communications International's credit three notches to BB-minus after the local telephone service provider slashed its borrowings. The company has cut its debt to $17.5 billion from $26 billion in the past two years.
OPEC said it will make up for short supplies in the wake of pipeline sabotage that shut down exports from Iraq for a second day. The pledge may have little effect on near-record prices. With the exception of Saudi Arabia, members of the Organization of Petroleum Exporting Countries are producing at or near their limits.
A European Union panel of experts failed to secure the required majority for or against approving the import and processing of a genetically modified canola oil made by Monsanto, the European Commission announced. The application now moves to EU government ministers, who have three months to try to reach a decision. If the ministers fail to approve or reject it, the commission is empowered to decide.
Mitsubishi Motors, beset by corporate scandal and defective vehicles, said it will cut salaries to offset an expected plunge. Executive pay will be cut by as much as half while rank-and-file workers take 5 percent pay cuts for the next two years.
Marks & Spencer rejected a revised $14.9 billion takeover bid by retail entrepreneur Philip Green. Stuart Rose, the British food and clothing chain's chief executive, said the offer was too low. Greenowns the Bhs department store chain and Arcadia clothing stores. Rose left Arcadia, where he was chief executive, two years ago, when Green bought the company.
Corning denied charges by China's commerce ministry that it engaged in dumping of optical fiber there, selling it at prices low enough to hurt Chinese fiber makers. Chinese officials will travel to the United States to visit representatives of the company, then issue a final determination.
Bear Stearns, the seventh-largest securities firm, said fiscal second-quarter profit rose 24 percent, to $347.8 million, from $280.4 million in the same quarter a year earlier, boosted by trading and sales of higher-yield mortgage bonds. Net revenue rose 18 percent, to $1.7 billion.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.