Alliance Capital Management removed two top executives and warned it will probably face penalties for improper mutual-fund trades. The New York company is among the world's largest investment managers and is the latest firm linked to a scandal over alleged market timing. The practice is not illegal, but most funds prohibit it. Securities regulators maintain those that do so - but then grant exceptions - are committing fraud.
Troubles mounted at Putnam Investments, the nation's fifth-largest mutual-fund company and the first to be charged in the trading scandal. Assets under management at the Boston-based firm fell $14 billion last week due to withdrawals by pension funds and individual shareholders, The Wall Street Journal reported. Putnam has denied any wrongdoing.
Railroad company CSX Corp. said it will cut 800 to 1,000 jobs over the next sixth months as it streamlines operations. The company, which reported a loss of $103 million in the third quarter, said the layoffs of nonunion workers will save an estimated $60 million to $80 million over the next two quarters. CSX is based in Jacksonville, Fla., and has 34,000 employees in 23 states.
Fueling speculation of a new bankruptcy filing by toy-store operator FAO Inc., the company said Monday it had received a notice of default from lenders, greatly limiting access to further loans and credit lines. FAO said it was trying to resolve issues with lenders that led to the notice. The company, which runs the FAO Schwarz, The Right Start, and Zany Brainy toy chains, emerged from bankruptcy just six months ago.