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March 82007

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name='1'>Credit Card Companies at Senate Hearing Offer to End Some
Questionable Practices

In a bid to stave off
major legislative action, officials from three major credit card
companies testified that they are reviewing and changing some practices
that have come under criticism by consumer activists and
lawmakers,
size='3'>CongressDaily reported yesterday.
Representatives from Bank of America Corp., Chase Bank

w:st='on'>
size='3'>USA and
Citigroup Inc. testified before the Senate Homeland Security and
Governmental Affairs Permanent Subcommittee on Investigations about
their attempts to better inform customers and discontinue other
practices. Chase CEO Richard Srednicki said his company would stop
continually charging customers over-the-limit fees, allowing for only up

to three consecutive monthly charges if a customer exceeds the cap.
Vikram Atal, CEO of Citi Cards, told the panel his company announced
last week it would end the practice of universal default, or charging
customers a higher interest rate if they missed a payment on another
card or if their credit score had dropped. The company also would no
longer exercise the right to raise a customer's credit card interest
rate at any time for any reason. Bruce Hammonds, president of Bank of
America Card Services, said his company is exploring a policy to reduce
interest rates for risky customers who have not had a late payment or
over-the-limit charge for six months.


name='2'>Grassley Holds Back Hedge Fund Registration
Amendment

Senate Finance ranking member Charles
Grassley (R-Iowa) tried Wednesday to secure an
amendment requiring hedge funds to register with the SEC, but backed off

when the bill's managers cited a backlog of pending amendments to
legislation to implement recommendations of the 9/11 Commission,
CongressDaily
size='3'>reported today. Grassley has been a longtime proponent for

more oversight over the lightly regulated trillion-dollar industry,
which comprises typically private funds for the wealthy that engage in
more risky strategies such as short-selling. Grassley has noted that
millions of pension holders are unaware about their exposure to hedge
fund losses because there are no rules. Lawmakers have taken a
greater interest in the issue after the U.S. Circuit Court of Appeals
for the
face='Times New Roman' size='3'>District of
Columbia in June struck
down an SEC rule that would have required hedge funds to register as
investment advisors.

In related news, the House
Financial Services Committee announced that it would hold a hearing
titled “Hedge Funds and Systemic Risk in the Financial Markets' on

Tuesday, March 13 at 10 a.m. Witnesses to be announced at a later
date.

FBI
Reports Increase in Mortgage Fraud Cases

The number of mortgage fraud
cases investigated by the FBI almost doubled in the past three years,
reflecting a problem that is 'pervasive and growing,' according to the
Associated Press today. The FBI said yesterday in its annual report on
financial crimes that mortgage fraud cases increased to 818 in 2006 from

436 in 2003, and acknowledged that its caseload probably represents a
small piece of the problem. Mortgage fraud is difficult to track, the
FBI said, because the industry is not required to report fraud, and the
sale of mortgage loans on secondary markets can 'conceal or distort the
fraud,' thereby reducing the number of cases reported. 'The true level
of mortgage fraud is largely unknown,' the report said. The FBI said
fighting mortgage fraud is a priority because of the impact of mortgage
lending and housing on the economy. 

href='http://www.washingtonpost.com/wp-dyn/content/article/2007/03/07/AR2007030702313.html'>Read

more.

In related news, the House
Financial Services Committee announced that it would be holding a
hearing on March 27 titled “The New Regulatory Guidance on
Subprime Hybrid Mortgages: Regulators and Response.” Witnesses to
be announced.

Delta

Provides Post-Bankruptcy Employee Benefits

Delta Air Lines Inc. plans to
issue a lump-sum cash payment to many employees when the airline emerges

from bankruptcy this spring, the Associated Press reported yesterday.
The exact amount of money was not disclosed, but the newsletter said all

regular employees, not including officers and directors, will receive a
lump-sum payment representing a percentage of their pay. A majority of
employees also will receive grants of unrestricted stock in the
reorganized Delta. About 1,000 leaders of the company will be granted
ownership stakes in Delta, but those shares will come in different
forms, such as restricted stock, stock options and performance stock,
and will vest over periods of up to three years. In addition, some
pieces of the management awards will require Delta to meet specific
performance goals for them to have any value. 

href='http://business.bostonherald.com/businessNews/view.bg?articleid=186999'>Read

more .

Refco

Trustee Objects to Claims

The U.S. Trustee for
Refco Capital Markets Ltd. on Tuesday objected to five proofs of claim
brought during Refco Inc.’s bankruptcy proceedings, alleging the
claims should be disallowed because of preferential payments made to the

claimants, Bankruptcy
Law360 reported yesterday. U.S. Trustee
Marc S. Kirschner contends that since the preferential
payments in each case are greater than the claims in question, the
claims should be disallowed. In the 90 days prior to Refco’s Oct.
17, 2005 petition date,  Metallinvestbank
transferred almost $2 million out of its account, all of which is
classified by Kirschner as preferential payments, court documents said.
The second and third claims Kirschner objected to follow the same
reasoning as the Metallinvestbank objection. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=19992'>Read

more.  (Registration required.)

Judge

Rejects Adelphia's $32 Million Settlement with Insurers

Bankruptcy Judge
Robert E. Gerber
has denied approval of Adelphia Communications
Corp.’s $32.5 million settlement with insurers, saying it would
interfere with related litigation pending in another court,
Bankruptcy Law360
reported yesterday. The decision, issued Tuesday in
Manhattan Bankruptcy Court, struck down Adelphia’s deal to sell
back about $50 million worth of liability insurance to insurers that
have sued fallen Adelphia executives in another court. The rejection was

seen as a victory to the cable company's former chief executive, John J.

Rigas, as well as his sons and other former officers who still want to
sue the insurers for financial help with their litigation. Former
executives, accused of looting more than $3 billion from Adelphia's
coffers, would have been prevented from doing so if the deal had been
approved. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=19978'>Read

more . (Registration required.)


name='7'>Motorola Wins Appeal to Reopen Iridium
Settlement

A bankruptcy court will
reexamine a settlement between lenders and creditors of
IridiumOperating LLC
that was used to fund a lawsuit against former Iridium parent Motorola
Inc., Bankruptcy
Law360 reported yesterday. The U.S. Court of
Appeals for the Second Circuit decided Monday that a district court
erred in affirming the order of a bankruptcy court to approve the
settlement without explaining deviations from the Bankruptcy Code. The
circuit court remanded the case to the bankruptcy court to assess the
deviations. “Given the settlement's funding of Motorola's
litigation opponent, Motorola's objection is understandable.
Nevertheless, it is telling that no other creditor objects to the
settlement,” Judge Richard Wesley wrote. 

href='http://bankruptcy.law360.com/Secure/ViewArticle.aspx?id=19961'>Read

more . (Registration required.)


w:st='on'>
name='8'>Illinois
face='Times



New
Roman' size='3'> Housing Venture Project Files for Chapter
11

The venture that controls

a controversial 115-home residential project in
w:st='on'>
size='3'>Bridgeport,
w:st='on'>
size='3'>Ill., has filed
for chapter 11 protection,

size='3'>Crain’s Chicago Business
size='3'>reported yesterday. J.S. II LLC filed for protection on Monday
listing $14.5 million in liabilities and assets with a book value of
about $15.4 million. The bankruptcy filing comes despite the
project’s strong results, with 102 homes sold, at prices ranging
from $354,000 to $1.7 million. However, many homeowners still have
complaints about construction defects, said Steven Towbin, who
represents J.S. II and the other companies. 
href='http://www.chicagobusiness.com/cgi-bin/news.pl?id=24133'>Read
more.

SEC
Mulls Stock Backdating Fines

SEC Chairman Christopher
Cox and his four fellow commissioners are trying to figure out whether
and how harshly to penalize companies where stock options backdating
occurred, the Wall
Street Journal reported today. The
behind-the-scenes struggle has delayed a formal commission vote on a
proposed $7 million settlement that the agency's staff reached with
Brocade Communications Systems Inc. a year ago in one of the first cases

dealing solely with backdating. The SEC says figuring out exactly how
shareholders were harmed is tricky, and deciding whether to fine the
companies is even trickier. Many companies grant executives options to
purchase stock at a specific price as part of their compensation.
Pressure to resolve backdating cases stepped up last week, when two
Democratic lawmakers who serve on a House committee that oversees the
SEC wrote a letter to Cox criticizing the slow pace of enforcement
actions in backdating cases. 

href='http://online.wsj.com/article/SB117331880301530353.html?mod=home_whats_news_us'>Read

more . (Registration required.)


name='10'>Take-Two Shareholders Plot a Revolt against
Board

A consortium of investors

disclosed yesterday that it intended to oust the board and possibly the
top management of Take-Two Interactive Software, a video-game publisher
that has been plagued by legal, regulatory and accounting problems,
the New York
Times reported today. The maneuver, by
investors who hold a collective 46 percent of the outstanding shares of
Take-Two, comes just a few weeks after Ryan A. Brant, the
company’s founder and former chief executive, pleaded guilty to
falsifying records in a stock option backdating scheme. The takeover
effort also is unusual in that it entails the cooperation of several
hedge funds and mutual funds. The investors declined comment, citing
legal restrictions, but their filing with the Securities and Exchange
Commission said they were seeking to appoint Strauss Zelnick, the former

head of BMG Entertainment, as Take-Two’s new chairman. 

href='http://www.nytimes.com/2007/03/08/technology/08take.html?_r=1&oref=slogin&ref=business&pagewanted=print'>Read

more .

href='http://www.nytimes.com/2007/03/08/technology/08take.html?_r=1&oref=slogin&ref=business&pagewanted=print'> 

 

 

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