Judge Asked to Void AIG Claim
An offshore company headed by Maurice R. "Hank" Greenberg asked a court to declare that American International Group has no claim to $19 billion in AIG stock that has funded the insurance giant's executive compensation scheme. Starr International Co., headed by Greenberg, right, and based in Ireland, said in court papers that it is a separate company, free to invest the money as it sees fit, despite the fact that for decades it was headed by AIG executives and provided long-term incentives to spur AIG executives to meet performance goals.
The papers, filed yesterday in Manhattan federal court, are part of the messy disentangling of AIG and Greenberg, who resigned under pressure from New York Attorney General Eliot L. Spitzer and other regulators in the spring after heading the company for 37 years.
Buyer Interested in Part of Refco
Refco, the commodities broker facing insolvency because of a bad-debt scandal, said it's in "advanced" talks to sell its futures brokerage to a group led by New York buyout firm J.C. Flowers. Refco said it expects an agreement to be reached. No terms were disclosed.
A deal for Refco, which operates the largest independent U.S. futures brokerage, will ease concern about the impact of a collapse on financial markets. The New York company began shutting two of its three units after stunning clients and investors Oct. 10 with the revelation that former chief executive Phillip R. Bennett hid as much as $545 million in bad debts.
More Charges in KPMG Case
A federal grand jury indicted 10 more people associated with accounting firm KPMG on Monday in a case alleging that bogus tax shelters the company sold helped rich clients avoid billions of dollars in taxes. Eight former KPMG executives and a lawyer have already been indicted over the sale of illegal tax shelters.
KPMG, the fourth-largest U.S. accounting firm, agreed in August to pay $456 million to avoid prosecution over its sale of abusive tax shelters. The firm's former chief financial officer, Richard Rosenthal, was among the latest group under indictment on charges of conspiracy to defraud the Internal Revenue Service and tax evasion.
Filings Surged on Eve of New Law
More than 200,000 bankruptcy petitions were filed last week as financially strapped Americans sought to beat the Sunday midnight deadline when a new, more restrictive bankruptcy law took effect. So many consumers sought protection from creditors in the last week of the old law that the exact number of filings will not be known until later this week. But bankruptcy experts said they expect the tally be at least six times the weekly average of 30,000.
Pay Cut for Delphi Executives
Top Delphi executives said they will take pay cuts while the auto-parts supplier seeks wage concessions from its hourly workers and tries to reorganize its finances under bankruptcy protection. The action came after the United Auto Workers criticized Delphi's decision to beef up top executives' severance packages the day before it filed for bankruptcy protection. Chief executive Robert S. Miller said he would reduce his $1.5 million base salary to $1 per year, effective Jan. 1, 2006, and keep it there until the company successfully emerges from Chapter 11.
Citigroup said third-quarter profit rose on a $2.12 billion sale of an insurance business and on higher investment-banking revenue. Profit increased 35 percent compared with the year-ago period, to $7.14 billion. Revenue climbed 15 percent, to $21.5 billion.
Charles Schwab said it turned a third-quarter profit of $207 million, compared with a loss of $41 million in the year-ago period. Revenue at the stock broker rose 14 percent, to $1.14 billion.
T-bill rates rose. The discount rate on three-month Treasury bills auctioned yesterday increased to 3.785 percent from 3.63 percent last week. Rates on six-month bills rose to 4.015 percent from 3.95 percent. The annualized return to investors is 3.875 percent for three-month bills, with a $10,000 bill selling for $9,904.32, and 4.155 percent for a six-month bill selling for $9,797.02. 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 4.14 percent last week from 4.08 percent the previous week.
Compiled from staff and news service reports.