WorldCom Executives Settle
Three former executives of WorldCom have reached tentative settlements in a class-action lawsuit brought by investors who lost billions of dollars when the telecommunications firm collapsed in an $11 billion accounting fraud, according to U.S. District Judge Denise L. Cote.
In an order posted on a court Web site, Cote said details of the settlements would be made public today. She scheduled a hearing Thursday to discuss preliminary approval of the settlements, reached by former WorldCom finance chief Scott D. Sullivan, former accounting director Buford T. Yates Jr. and former controller David F. Myers. The three were the last remaining defendants in the investor lawsuit.
American Express Profit Up 16%
American Express said its second-quarter profit rose 16 percent, to $1.01 billion, as it added cardholders through partnerships with companies such as MBNA. Revenue rose 11 percent, to $8 billion. This quarter marks the firm's 14th straight earnings increase of more than 10 percent, the longest streak in the Dow Jones industrial average.
Fidelity May Face SEC Action
Fidelity Investments said it may face a civil action from the Securities and Exchange Commission in a probe of whether its traders sent business to brokerage firms that offered gifts and gratuities, rather than to firms offering the best deals on trades.
The company, which manages more than $1.1 trillion in assets, said in a statement it had received notice from the SEC of the possible action. Spokesmen for the SEC declined to comment. Fidelity said it has been cooperating with the SEC and other investigations involving conflicts of interest related to brokers' gifts to traders at Fidelity and other firms.
MERGERS & ACQUISITIONS
Generic Drug Giant Proposed
In a deal that would create the world's largest generic-drug company, Teva Pharmaceutical Industries said it is acquiring rival Ivax for about $7.4 billion in cash and stock. If completed, Teva would generate sales of about $7 billion a year, the company said. By contrast, rival Mylan Laboratories had fiscal 2005 revenue of $1.3 billion.
Generic drugs account for 48 percent of prescriptions in the United States, an amount expected to rise as those who pay for health care continue to push patients to take cheaper medicines.
Maytag Weighing Whirlpool Offer
Maytag will consider a $1.44 billion offer from Whirlpool, avoiding a possible hostile takeover after earlier rebuffing its competitor. Maytag's board reversed itself after Whirlpool, the largest U.S. appliance maker, increased its offer to $18 per share. Maytag, the No. 3 manufacturer, had previously favored a $14-per-share bid from buyout firm Ripplewood Holdings.
T-bill rates rose. The discount rate on three-month Treasury bills auctioned yesterday rose to 3.345 percent from 3.22 percent last week. Rates on six-month bills rose to 3.54 percent from 3.42 percent. The actual return to investors is 3.42 percent for three-month bills, with a $10,000 bill selling for $9,915.45, and 3.655 percent for a six-month bill selling for $9,821.03. Separately, the Federal Reserve said the average yield for one-year Treasury bills, a popular index for making changes in adjustable-rate mortgages, rose to 3.68 percent last week from 3.59 percent the previous week.
Compiled from staff and news service reports.