Economist Jeffrey M. Lacker was chosen as the new president of the Federal Reserve Bank of Richmond to replace the retiring Alfred Broaddus Jr. Lacker, 48, is currently research director at the Richmond Fed and has a doctorate in economics from Purdue University. He joins Timothy F. Geithner in New York and Janet L. Yellen in San Francisco as new regional bank presidents who will sit on the interest-rate-setting Federal Open Market Committee. The Richmond Fed district covers the District, Maryland, Virginia, the Carolinas and most of West Virginia.
ADM Settles Antitrust Lawsuit
Archer Daniels Midland will pay $400 million to settle a federal antitrust lawsuit that claimed the company conspired in the early 1990s to fix the price of high-fructose corn syrup, a sweetener used in products including soft drinks and pasta sauces. The class-action lawsuit was filed in 1995 by about 20 corn syrup buyers, including Coca-Cola and PepsiCo. The case had been scheduled for a September jury trial. The lawsuit grew out of ADM's involvement in a price-fixing scandal involving the livestock feed supplement lysine and citric acid, used in food, detergents and other products.
California is suing Enron and several subsidiaries for allegedly manipulating electricity markets during the state's 2000-2001 energy crisis and costing Californians hundreds of millions of dollars. The lawsuit, filed in state court, seeks restitution and other, unspecified damages from the Houston-based energy company. Separately, the judge overseeing Enron's bankruptcy reorganization said the company's plan to exit bankruptcy will be ruled on by July 15.
A quarter of all credit reports contain mistakes serious enough to keep consumers from qualifying for bank accounts, car loans or mortgages, a report by the Public Interest Research Group says. Of 197 credit reports collected from people in 30 states, 79 percent had some sort of error; 54 percent had inaccurate personal information; 30 percent listed accounts as open even though consumers had closed them; and 8 percent were missing major accounts that would indicate creditworthiness, the report states.
A former Tyco International director testified that the company's compensation committee never approved a special bonus worth as much as $17 million for Mark A. Belnick, its former top lawyer, and wasn't asked to review Belnick's compensation after his hiring agreement. W. Peter Slusser said he thought all extraordinary bonuses had to be approved by the committee. Belnick is charged with grand larceny, securities fraud and falsifying business records.
Allou Health Care's former chairman and former chief executive, who are father and son, were indicted on charges of having a warehouse burned down as part of a scheme to cheat banks out of $140 million. Victor Jacobowitz, his son Herman, two other sons and another former employee previously were charged with fraud and trying to bribe a fire marshal. Allou, a publicly held company based in Brentwood, N.Y., was forced into bankruptcy by its lenders in April 2003 and is being liquidated. Prosecutors said Allou, which reported $500 million in annual revenue, fabricated $220 million in sales and $200 million in inventory to borrow more money in the 15 months before it ended operations.
NASD is investigating 20 cases in which dealers may have made improper markups in selling corporate and municipal bonds, Douglas Shulman, NASD's president in charge of markets, services and information, told the Senate Banking Committee. The committee is examining the fairness of trading in the bond market.
World Bank grants are effective in improving business efficiency, education and health programs in poor countries, an independent audit said. The findings by Booz Allen Hamilton may help a U.S. campaign to convert more of the bank's loans into grants. The World Bank's 184 members are preparing to replenish funds in the bank's Independent Development Association, the unit that provides assistance to the world's poorest nations.
Harvard University and Beth Israel Deaconess Medical Center will pay $2.4 million to settle allegations that they improperly billed the National Institutes of Health under four research grants, U.S. prosecutors said. The settlement is in addition to $850,188 that Harvard agreed to pay in 2002 regarding the same grants, which were in effect from 1994 to 1999, U.S. Attorney Michael J. Sullivan said in a statement.
Mortgage rates were mixed this week, Freddie Mac said. In its weekly nationwide survey of rates, Freddie Mac said rates on benchmark 30-year, fixed-rate mortgages climbed to 6.32 percent for the week ended June 17, up from 6.30 percent last week. Rates for 15-year, fixed-rate mortgages also rose this week to 5.70 percent, up from 5.67 percent last week. But rates for one-year adjustable rate mortgages dipped to 4.13 percent, down slightly from 4.14 percent last week.
Union Pacific intends to hire 5,000 train crew members, 800 more than its previous plan, to help end delays that forced it to turn away shipments and reduced its second-quarter earnings. The nation's largest railroad, whose trains are running about 10 percent slower than at this time last year, also will add about 700 locomotives, chief executive Richard Davidson said.
Cendant former chairman Walter Forbes and ex-vice chairman E. Kirk Shelton asked the judge in their accounting fraud trial in Hartford, Conn., not to let jurors see how well they did at the Harvard Business School, court papers show. The pair allegedly inflated income while they were at CUC International, which merged with another company to become travel and real estate services firm Cendant, but say they didn't know CUC accountants were cooking the books.
Mexico's third-largest bank was ordered by a judge to pay 36 trillion pesos, or $3.1 trillion, to a family that claimed it was owed that amount from a 1988 deposit that was supposed to pay 139 percent interest a month. The amount is more than twice the total assets of Citigroup, the world's largest banking company. Banca Serfin, which is jointly owned by Spain's Banco Santander and Bank of America, called the ruling "null" and refused to cooperate, even after court representatives entered a bank branch in the city of Jalapa to demand payment. There was no explanation for why the interest rate was so high.
Venezuela's national oil company is considering building two new refineries, one of which would be the first in the United States since 1976, the head of Petroleos de Venezuela's U.S. refining operations said. Citgo Petroleum chief executive Luis E. Marin said high-level discussions are taking place at PDVSA's Caracas headquarters, but would not say where the installations would be built or when a decision might be made.
HSBC Holdings, Europe's largest bank by market value, will cut 3,500 jobs in Britain, or about 9 percent of its workforce there, after removing 4,000 positions last year, as finance companies shift clerical work to Asia. It will add 1,000 branch staff members, said Richard Beck, a spokesman for the London-based company. Most job cuts are office administrative and support workers, and some 950 positions will be moved to Asia, Beck said.
American Electric Power may transfer control of its power lines in Virginia to the grid operator for the mid-Atlantic states, the Federal Energy Regulatory Commission said. The decision puts AEP's planned integration into PJM Interconnection's network on schedule to meet an Oct. 1 deadline. Virginia has passed a law blocking the transfer of AEP's Appalachian Power unit without state approval.
WorldCom investors have until the end of August to join a class-action lawsuit or pursue individual actions to recover the billions of dollars they lost when the long-distance telephone company collapsed, U.S. District Judge Denise Cote in New York ruled. The trial in the class action against former WorldCom officers, accountants and a dozen investment banks is scheduled to start in January.
J.E. Robert Cos., a McLean-based real estate investment company, started a new investment fund to buy structured real estate finance products. The fund, JER Investors Trust, was capitalized in a $172.5 million stock sale underwritten by Friedman, Billings, Ramsey. The fund will invest in commercial mortgage-backed securities, mezzanine and bridge loans on commercial real estate.
Calvert Group, the Bethesda-based mutual fund group that invests only in what it calls socially responsible companies, removed contractors Titan Corp. and CACI International from its social index over allegations they were involved in abusing Iraqi prisoners.
Titan has denied its employees were involved in any wrongdoing and CACI has said its workers weren't involved in the alleged abuse. A number of other companies, including Arlington-based energy company AES, were removed for other reasons.
Carnival said second-quarter earnings more than doubled, to $332 million, as higher trip prices fed the cruise operator's biggest earnings gain in 17 years as a public company.
Red Hat, the world's largest distributor of the open-code Linux operating system, said fiscal first-quarter profit rose to $10.7 million on $41.6 million in sales. In the corresponding quarter a year ago, Red Hat posted profit of $1.5 million on revenue of $27.2 million.
Compiled from reports by the Associated Press, Bloomberg News, Dow Jones News Service and Washington Post staff writers.