June 2, 2004
Senate Deal Opens Way for
Class Action Bill After DOD Measure
Acknowledging that he did not have the requisite 60 votes to proceed
Tuesday to a bipartisan class action bill, Senate Majority Leader Bill
Frist (R-Tenn.) postponed action on it until immediately after the
chamber completes its work on the FY05 defense authorization bill,
CongressDaily reported. But after striking a deal with
Minority Leader Tom Daschle (D-S.D.) to limit the number of potential
amendments to that defense bill, Frist predicted the Senate would wrap
up its work on that legislation 'late this week or early next week.' The
deal means the Senate would move directly to the class action bill
without the need to invoke cloture on a motion to proceed. 'It isn't our
desire to oppose going to the class action bill once the work on the DOD
bill has been completed,' Daschle said, the newswire
reported.
Tough Capital Insider
to Face His Critics on Bank Regulation
John D. Hawke Jr., the comptroller of the currency,
will address his critics this week, the New York Times
reported. The House Financial Services Committee will hold a
hearing today to review how the comptroller and the Federal Reserve
monitor suspect banking activities like those at Riggs. The Senate
Banking Committee will hold a similar hearing tomorrow, with Hawke
scheduled to testify. The state officials argue that Hawke's regulatory
moves will hurt consumers by allowing big banks to engage in unchecked
consumer lending abuses by hiding behind the shield of a national
charter, and that his agency is too cozy with the banks. Read the full
article at
href='http://www.nytimes.com/2004/06/02/business/02hawke.html'>www.nytimes.com.
Actuaries Under
Scrutiny on Pension Fund Pacts
The Department of Justice has asked several big
actuarial firms for information about the terms of their client
agreements, in what appears to be an effort to learn whether certain
provisions violate antitrust laws, the New York Times reported.
Officials of the actuarial firms said they had received 'civil
investigative demands,' or written requests for information that fall
short of subpoenas, from the department's antitrust division. The
letters seek documents and other information related to the firms'
decisions, about two years ago, to ask their pension fund clients to
sign clauses limiting their ability to sue the firms. Read the full
article at
href='http://www.nytimes.com/2004/06/02/business/02pension.html'>www.nytimes.com.
Connecticut Says Forstmann
Misrepresented Strategy
The state of Connecticut opened its court case against
buyout firm Forstmann Little & Co. yesterday, arguing that the Wall
Street firm misrepresented itself as a 'conservative investor,' Reuters
reported. In opening arguments in a state courtroom near Hartford,
attorney Gerald Fields, representing Connecticut, said the state wants
$125 million back that Forstmann lost in two telecommunications
companies that went bankrupt, XO Communications Inc. and McLeodUSA Inc.
If Connecticut prevails before the six-member state jury, the case could
have broad implications for the largely unrestricted freedom buyout
funds now have in pursuing investments backed by money from pension
funds like Connecticut's, industry experts said. But much depends on the
particular language of the state's contract with Forstmann, they said,
the newswire reported.
Fields said Forstmann Little promotional materials
describe the fund as one that backs management buyouts and takes
controlling stakes in profitable companies with large market shares. The
XO and McLeodUSA investments don't fit those criteria, he
said.
Avianca Airline Board Picks
Bid By Brazilian
Colombia's bankrupt airline Avianca said on Tuesday
its board had picked a Brazilian oil entrepreneur to take charge of the
carrier, instead of a rival group led by Continental Airlines, Reuters
reported. The Colombian carrier said that it would base the
reorganization plan it must present to a U.S. Bankruptcy Court under its
chapter 11 proceedings on the bid by Brazilian businessman German
Efromovich. Efromovich, who heads conglomerate Sinergy and Brazilian
carrier Ocean Air, offered to take a 75-percent stake in the airline in
return for a $64-million capital injection and assuming Avianca's debt
of about $300 million. In a statement, Avianca said that
Efromovich's bid 'adequately complied with necessary requirements for
the company to emerge from chapter 11 in a satisfactory manner,' the
newswire reported.
Pennsylvania Senate to Study Company's
Bankruptcy
State regulators voted last week to examine the impact
a bill processor's bankruptcy has had on customers and companies, the
Express Times reported. CashPoint
Network Services Inc. had been collecting payments from consumers and
forwarding the money to utilities and businesses throughout Pennsylvania
and other states. The company was forced into chapter 7 for failing to
make payments. Locally, two utilities, UGI and PPL, used CashPoint,
which provided its service at numerous businesses. The Pennsylvania
Public Utility Commission said between $20 million and $25 million was
not paid to utilities. PPL and UGI have sent letters to affected
customers advising them to wait for their next billing statements to see
if their payments had been applied, the newspaper
reported.
Adelphia Founder Begins
Defense in Fraud Trial
Lawyers for John J. Rigas, the founder of
face='Times New Roman'>Adelphia Communications, began presenting
his defense yesterday, Bloomberg News reported. Defense lawyers called a
hospital administrator from Mr. Rigas's hometown, Coudersport, Pa., to
testify to his character. David Acker, the chief executive of Charles
Cole Memorial Hospital, said Rigas recruited doctors and promoted rural
hospitals while serving almost three decades as a board member of the
hospital. 'I think John Rigas is one of the finest men I've ever met,'
Acker told federal jurors in Manhattan. Read the full article at
www.bloombergnews.com.
California Power Grid CEO And
Vice President Resign
The top officer of California's electricity grid quit
on Tuesday along with an official managing an overhaul of the state's
electricity market in the wake of the state power crisis in 2000-01,
Reuters reported. Terry Winter, CEO of the California Independent System
Operator, and Elena Schmid, vice president of corporate and strategic
development, submitted their resignations yesterday. Michael Kahn,
chairman of the ISO's board of governors said that the resignations were
voluntary and the board asked both officers to stay on as consultants,
the newswire reported.