Fund Wants Part of Ebbers Deal
Alabama's pension system asked a judge to lift a freeze on its fraud suit against former WorldCom chief executive Bernard J. Ebbers so it can pursue part of a $45 million settlement. The Retirement Systems of Alabama, a $30 billion fund, says it might not be covered by the settlement negotiated with prosecutors and investors in a separate class-action suit.
Ebbers was found guilty of fraud March 15 in connection with the collapse of WorldCom, and he is scheduled to be sentenced next week in New York. The Alabama pension fund is seeking as much as $30 million in its lawsuit and says it lost as much as $135 million on its WorldCom shares.
Graco Strollers Recalled
Duo Tandem and MetroLite strollers, manufactured by Graco Children's Products, were recalled because they can fail to latch properly and unexpectedly collapse. The Duo Tandem strollers were manufactured from 1994 to 1999. The affected MetroLite strollers were manufactured in 2000 and 2001. Consumers should stop using the strollers immediately and contact Graco at 800-981-4412 or www.gracobaby.com to receive a free repair kit.
SEC's Top Trial Lawyer to Leave
David L. Kornblau, the Securities and Exchange Commission's top trial lawyer, will resign in August to work as head of regulatory affairs for Merrill Lynch, the agency announced. Kornblau led the nationwide trial program during a period of numerous corporate scandals and heightened enforcement activity, including cases against Enron and Wall Street research analysts and mutual funds, the SEC said in a press release.
Service Industry Boosts Hiring
The U.S. services industry grew faster than forecast in June as companies from railroads to retailers boosted hiring, signs the economy is withstanding higher energy costs.
The Institute for Supply Management said its index for non-manufacturing companies, including financial services and retailers, increased to 62.2 last month from 58.5 in May.
The purchasing-manager group's hiring gauge increased to a four-month high in June, supporting forecasts that the economy may have added more than twice as many jobs as in May.
Lawsuit Against Scrushy Revised
A revised shareholder lawsuit contends that fired HealthSouth chief executive Richard M. Scrushy should repay $46.7 million in bonuses he received for profits that the medical services chain now says never existed.
The filing cites the restatement of finances that HealthSouth released last week, which show that it lost $364 million in 2000 and $191 million in 2001, rather than profiting $481 million for those two years as it originally reported.
The revised suit also cites evidence from Scrushy's fraud trial, which ended last week with his acquittal.
Machinist, Rail Unions to Merge
The International Association of Machinists and Aerospace Workers agreed to merge with the Transportation Communications International Union, which represents 46,000 rail workers, to increase bargaining power.
The merger is an example of unions stretching their membership across industries, said Robert Bruno, a labor relations professor at the University of Illinois at Chicago. He also said the move could block other unions, such as the Teamsters, from trying to add more rail union members.
Boeing's W. James McNerney Jr., who became chief executive of the No. 2 U.S. defense contractor July 1, will receive an annual salary of $1.75 million, a bonus of as much as $4.03 million a year, and up to $25.3 million in stock awards, the Chicago company said in a filing with the Securities and Exchange Commission.
Frontier Insurance Group, a holding company for U.S. specialty property casualty insurers, filed for bankruptcy protection after missing a payment on a $129.5 million bond in April. The filing comes four years after Frontier stopped writing new policies or renewing old ones because of losses from its medical malpractice business. The company has $79 million in assets and almost $272 million in liabilities.
American International Group selected Charles H. Dangelo as the company's senior reinsurance officer, marking another step to shore up its business in light of a probe into its accounting. Dangelo, who most recently served as president of AIG Global Risk Management, will be responsible for all outward reinsurance relationships involving AIG companies.
Compiled from staff and news service reports.