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Archive for Saturday, January 8, 2005

Briefcase

January 8, 2005

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United Airlines faces labor turbulence

United Airlines lost a key bankruptcy court ruling over its new pilots' agreement Friday but achieved last-minute negotiating breakthroughs with two other unions to postpone an awkward courtroom showdown over its push for new labor contracts.

Judge Eugene Wedoff dealt United a setback by rejecting a disputed cost-savings deal for the pilots that he said would "unduly tilt the bankruptcy process."

Hours later, after negotiating throughout the day to avoid a labor trial, United announced a tentative short-term labor agreement with its mechanics' union and said it was on the verge of a similar pact with flight attendants.

Advertising

Judge's ruling spits out Listerine's claims

Mouthwash is no substitute for dental floss, a federal judge ruled, calling a Listerine ad campaign false and misleading and a public health risk.

Judge Denny Chin said in a written ruling made public Friday that he expected to order Pfizer Inc. as early as Monday to stop claiming that its product, Listerine, was as effective as floss at reducing plaque and gingivitis between teeth.

The ruling came after McNeil-PPC Inc., a subsidiary of Johnson & Johnson, filed a lawsuit saying false claims in the advertising campaign that began last June posed an unfair threat against its sales of dental floss.

Leadership

H&R Block unit's CEO leaving company

H&R Block Inc. said Friday that the president and chief executive of its H&R Block Financial Advisors unit, Brian L. Nygaard, was leaving the company for personal reasons.

Last month, the National Association of Securities Dealers censured and fined the H&R Block Financial Advisors unit $500,000 for enabling deceptive "market timing" in mutual funds.

Jeffery W. Yabuki, H&R Block's chief operating officer, will oversee the unit as the company searches for a successor.

Lawsuit

Settlement meeting set in auto parts case

State prosecutors are looking for consumers who may have bought auto accessories from a Lawrence company that never delivered on such prepaid orders.

The Consumer Protection Division of the Kansas Attorney Genera'l's Office is calling a "pre-trial settlement" meeting Tuesday for consumers of Excalibur Auto Accessories, which formerly operated in Lawrence and Topeka.

The meeting is set for 7 p.m. at Holcom Park Recreation Center, 2700 W. 27th St.

Officials urge those who cannot attend to contact the division at (785) 296-3751.

The office filed suit against the company in March, accusing Excalibur of "deceptive and unconscionable" practices by accepting payment for product orders that were never placed nor filled.

The office already has identified at least 38 potential victims, and is seeking at least $77,000 in restitution and fines.

Sprint, Virgin mull IPO for joint venture

Sprint Corp. and Virgin Group reportedly are considering an initial public offering for their U.S. wireless joint venture, Virgin Mobile USA LLC.

The Wall Street Journal, quoting anonymous sources, said Friday that Virgin Mobile USA had asked a number of investment banks for proposals detailing how it could take a wireless venture public.

The Journal said the banks were to submit their reports in a few days, but its sources said no final decision had been made.

Spokesmen for both companies refused to confirm or deny the report.

Virgin Mobile, which began service in 2002, is one of several partnerships for Overland Park-based Sprint in which other companies introduce their own brand of cell service using Sprint's network. These include deals with AT&T Corp., the ESPN unit of Walt Disney Co. and Qwest Communications International Inc.

Settlement

Ex-WorldCom execs to pay $18 million

Ten former WorldCom Inc. directors personally will pay $18 million to compensate for investor losses from an accounting scandal that caused one of the largest bankruptcies in U.S. history.

The payments will mark one of the first times that executives who presided over corporate misdeeds have agreed to assume any personal financial liability for the resulting damage.

As with nearly all securities settlements, they did not actually admit to any wrongdoing in the WorldCom fraud.

The director payments, equal to slightly more than 20 percent of their combined net worth, will be supplemented by another $36 million from insurance policies taken out by WorldCom on behalf of the directors, according to the deal announced Friday by lead plaintiff New York State Comptroller Alan Hevesi.

SEC

Regulators zap Taser with investigation

Federal authorities have launched an inquiry into claims Taser International Inc. has made about safety studies for its stun guns. The company's shares plunged nearly 18 percent Friday.

The Securities and Exchange Commission also is looking into a $1.5 million, end-of-year sale of stun guns by Taser International to a firearms distributor that some stock analysts have questioned because it appears to inflate sales to meet annual projections.

Taser's president Tom Smith announced late Thursday that it was cooperating with the SEC informal inquiry. An informal inquiry is a step below a formal investigation, where regulators have subpoena power.

Smith added that the Scottsdale, Ariz.-based company stood by its safety statements and the recent sale.

Reinsurance

Berkshire Hathaway gets subpoena

Billionaire investor Warren Buffett's Berkshire Hathaway Inc. said it received a subpoena from the New York state attorney general's office demanding information about its reinsurance subsidiary General Re Corp.

The subpoena was delivered Thursday, eight days after the U.S. Securities and Exchange Commission asked for identical information about the reinsurance business, Berkshire Hathaway said in a statement.

Buffett is chairman of Omaha, Neb.-based Berkshire Hathaway, which said the subpoena sought documentation and information relating to nontraditional or loss mitigation insurance products from General Re and all its affiliates -- the same information sought by the SEC.

Leadership

Wal-Mart names COO for U.S. stores

Retailer Wal-Mart Stores Inc. announced Friday that Eduardo Castro-Wright, chief executive of Wal-Mart Mexico, would become executive vice president and chief operating officer of Wal-Mart Stores in the United States.

Castro-Wright, 49, has headed Wal-Mart's majority-owned Mexican subsidiary since 2001.

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