Morgan Stanley Profit Drops 24%
Morgan Stanley reported its biggest quarterly profit drop in almost four years as it began a search for a successor to chairman and chief executive Philip J. Purcell. A plunge in revenue from fixed-income trading, lower underwriting fees from stock sales and increased legal expenses led to a 24 percent drop in second-quarter profit, to $928 million from $1.22 billion in the comparable quarter a year earlier. Revenue slid 9 percent, to $6.04 billion.
SEC to Reconsider Fund Rule
Securities and Exchange Commission Chairman William H. Donaldson, trying to ensure that the mutual fund governance rule he championed stays on the books, set a vote next week to reconsider the measure after it was rejected by a federal appeals court.
Donaldson put the issue on the agenda for a public meeting Wednesday, his second-to-last day at the agency. The U.S. Court of Appeals for the D.C. Circuit ordered the SEC to further consider the costs to fund companies in complying with the rule, which requires mutual fund boards to be made up of 75 percent independent directors, including the chairman.
Bear Stearns Under SEC Scrutiny
Bear Stearns could face fines and other sanctions from the Securities and Exchange Commission over the company's role in improper mutual fund trading, the company said in a regulatory filing. A number of Wall Street firms and mutual fund companies have been heavily penalized in recent years by the SEC for improperly trading mutual funds after the markets close. Bear Stearns has been in talks with the SEC on resolving the matter, but said in its filing that SEC investigators have been authorized to bring an official action against the company.
United Fares Jump With Oil Prices
Several U.S. airlines raised fares, citing the latest surge in fuel costs for the need to charge up to 3 percent more per trip. The increases began Tuesday night when American Airlines and United Airlines, the industry's two largest carriers, posted higher fares effective immediately. Other carriers raised fares yesterday.
Passengers could pay an additional $20 or more for domestic and international flights as the busiest travel season of the year gears up. Oil prices remain above $58 a barrel, up about 50 percent in the past year.
Cablevision Panel to Review Deal
Cablevision Systems' board appointed a three-person committee to review the founding Dolan family's proposal to take the cable TV company private in a $7.9 billion transaction. The members are independent directors and have retained Willkie, Farr & Gallagher as legal advisers, the company said in a statement. Cablevision spokeswoman Kim Kerns declined to elaborate or provide the names of the committee members.
MassMutual to Vote on Ex-CEO
The recently ousted chief executive of MassMutual Financial Group, Robert J. O'Connell, abused his authority by retaliating against employees who questioned him and by using policyholders' assets for personal ends, according to his termination letter. The company's board is scheduled to take a final vote on O'Connell's employment and give him a chance to respond to the allegations in a meeting today. Through a spokesman, O'Connell denied any wrongdoing and vowed to challenge the board's conclusions.
Warning on Bullet-Resistant Vests
The nation's largest supplier of bullet-resistant vests to law enforcement agencies is urging customers to replace about 98,000 vests containing the fiber Zylon. Second Chance Body Armor, based in Central Lake, Mich., said the vests "may fail to perform and result in serious injury or death." The company previously recalled more than 130,000 vests made entirely with Zylon. The latest warning covers vests with filling blends containing any amount of the fiber.
Second Chance, undergoing reorganization in federal bankruptcy court, did not recall its remaining Zylon vests because it doesn't have the money to replace them, company attorney Doug Wagner said.
CKX, which recently acquired the producer of the "American Idol" television show, will sell 20 million common shares at $11 per share to pay off nearly all its debt and raise cash, perhaps for other acquisitions.
M&T Bank said Robert G. Wilmers will give up his role as president and chief executive after 22 years, though he will remain chairman. The firm appointed Robert E. Sadler Jr., chairman of the M&T bank unit since 2003 and president of the business from 1996 to 2003, to succeed Wilmers.
Compiled from staff and news service reports.