Federal regulators advised banking giant Morgan Stanley they may file civil charges against it for allegedly funneling shares from initial public offerings to investors who agreed to buy more stock later, the Wall Street Journal reported. Morgan Stanley has denied any wrongdoing. The move comes as the Securities and Exchange Commission (SEC) wraps up inquiries into alleged stock-offering abuses by more than a dozen leading brokerages.
The US Foodservice unit of troubled Royal Ahold NV, the world's third-largest supermarket operator, is under investigation by the SEC and the US Attorney's office in New York, published reports said. They join Dutch regulators in looking into possible accounting fraud at the Dutch company, which disclosed earlier this week that it overstated profits by at least $500 million for 2001 and 2002.
Struggling catalog retailer Spiegel Inc. appeared near bankruptcy after acknowledging in a filing with the SEC that it won't meet minimum requirements on two debt offerings for the period ended Feb. 23, the Chicago Sun-Times reported. Failure to do so would trigger an automatic payout from its cash flow early next month, although the company was seeking a waiver of certain terms of the offering. Spiegel has said it wouldn't have enough cash to make up the shortfall if the payouts occur.
Roche Holding AG said it lost $2.9 billion last year, the worst performance in its 107-year history. By contrast, the Swiss pharmaceutical giant posted a $2.7 billion profit in 2001. But since then, among other financial setbacks, it was fined $565 million by the European Union for its role in a vitamin price-fixing scheme.
Three more major companies announced deep job cuts:
• Fleming Companies Inc., the US's largest wholesale distributor of groceries, said it will lay off 1,800 employees as its contract with bankrupt Kmart Corp., its largest customer, expires. The company is based in Lewisville, Texas.
• The underwear subsidiary of bakery products giant Sara Lee Corp. said it will cut 1,200 more jobs in Puerto Rico. The unit laid off 3,900 workers there two years ago.
• Jet engine manufacturer Rolls-Royce warned of 1,100 more layoffs as it expands its outsourcing program. The cuts, which are planned for next year, would come on top of 5,000 that followed the Sept. 11, 2001, terrorist attacks in the US.