BUBBLE SUIT DISMISSED: U.S. District Judge Milton Pollack threw out a lawsuit Wednesday that claimed a conflict of interest at Merrill Lynch & Co. involving tainted research was to blame for the sharp drop in a technology-stock mutual fund after the dot-com bubble burst three years ago. But Pollack said even if there was a conflict of interest, it was public knowledge long before tech stocks peaked in 2000 and began their steep decline.
WORLDCOM REVISES PROPOSAL: WorldCom Inc. is proposing paying a record $750-million fine to shareholders who were defrauded by the company, an increase of more than $250-million from what it agreed to pay in an earlier proposal. The company, which filed the largest bankruptcy case in U.S. history last year, said in May it would pay $500-million to settle civil accounting charges by the Securities and Exchange Commission. Today's revised settlement was filed with U.S. District Judge Jed Rakoff of New York by WorldCom and the SEC.
FCC FINALIZES RULES: The Federal Communications Commission released final versions of its media ownership rules Wednesday, a move expected to trigger a response from lawmakers who already are fighting the measures. The Republican-controlled FCC eased decades-old restrictions on ownership of newspapers and television and radio stations with a 3-2 party-line vote June 2. The agency's chairman, Michael Powell, said in a statement released with the 257-page document that the FCC succeeded in "building modern rules that take proper account of the explosion of new media outlets for news, information and entertainment, rather than perpetuate the graying rules of a bygone black and white era."
ERNST & YOUNG FINED: Ernst & Young LLP, has agreed to pay $15-million and let tax agents examine its books as part of a settlement that ends an Internal Revenue Service investigation into the disclosure of tax shelters marketed and sold to wealthy clients. Ernst & Young spokesman Kenneth Kerrigan said the accounting firm admits no wrongdoing. The IRS touted Wednesday's accord as a model for future settlements. The agency has opened more than 90 investigations into tax preparation and accounting firms.
SPAMMER PLEADS GUILTY: Nelson Barrero, who operated Stuffingforcash.com Corp. and related companies, has pleaded guilty to wire fraud. He has agreed to repay more than $221,000 to consumers who were fleeced by a bogus work-at-home e-mail offer and may serve almost five years in prison for fraud, the Federal Trade Commission said. Barrero is scheduled to be sentenced Sept. 5 by a U.S. judge in E. St. Louis, Ill., the agency said. Barrero and his companies also reached a settlement with the FTC to reimburse consumers who paid $40 apiece on the false promise they would receive addressed envelopes they could stuff with sales letters, the agency said.
SPAMMER FACES PRISON: K.C. Smith of Oakville, Ky., a 20-year-old high school dropout who admitted sending out 9-million spam e-mails to raise money for two phony companies, could face as long as 40 years in prison and fines of up to $10-million, a federal prosecutor said. Smith pleaded guilty to criminal securities fraud for the scheme, in which he promised double-digit monthly returns to 29 people and claimed a bogus federal agency guaranteed the investments.
GUCCI SALES PLUMMET: Gucci Group NV, the luxury goods maker, said first-quarter profit plunged 97 percent as the war in Iraq, a deadly virus and the euro's rise hurt spending on the company's handbags and shoes. Net income declined to 1.2-million euros ($1.4-million) in the quarter ended April 30, from 35.5-million euros a year earlier, Gucci said in an e-mailed statement. Sales fell 6.7 percent to 567.1-million euros as the company posted an operating loss of 24.4 million euros in the quarter.
KINDRED STOCK CLIMBS: Kindred Healthcare Inc. stock rose 16 percent Wednesday after an analyst upgraded its stock on news it was selling its Florida and Texas nursing-home operations. Shares of the Louisville, Ky., company closed at $21.24, up $2.93, on the Nasdaq exchange. Tuesday, Kindred sold its nursing operations in Florida and Texas for $60-million and a $4-million lease termination fee.
REFI INDEX CLIMBS: The Mortgage Bankers Association said its refinance index, which tracks the number of applications, rose 5.2 percent to a seasonally adjusted 8,599.1 for the week ended June 27. Its purchasing index, a measure of new home sales, increased by 6.6 percent to 438.2. The climb in the indices was most likely caused by the delayed effects of recent declines in mortgage rates. But mortgage rates are now about a quarter of a percentage point higher than where they were two weeks ago, so a pullback in refinancings is expected in the near future, according to Drew Matus, economist at Lehman Brothers.