Citigroup Inc.’s Salomon Smith Barney investment banking division decided Wednesday to change compensation for its stock analysts, one day after Merrill Lynch &Co. settled charges that its stock analysts had misled investors. Salomon will adopt the same analyst compensation ground rules to remove conflicts of interest that Merrill Lynch accepted in a deal with New York Attorney General Eliot Spitzer that also included a $100 million fine. Spitzer had accused Merrill Lynch’s analysts of touting shares in companies so the firm would win highly profitable investment banking business from the same companies.
WorldCom Inc. shares rose more than 16 percent Wednesday in the wake of the telecommunications company’s announcement that it is eliminating its MCI tracking stock. The company announced the recombination of the WorldCom and MCI issues after the stock market closed Tuesday. The move was widely expected by analysts as management searches for ways to cut costs and position itself to repay $30 billion in long-term debt. WorldCom executives said the move will save the company more than $284 million a year in dividend payments.
America’s recovery from last year’s recession is gaining strength by the day, but the threat of another terrorist attack is the big “economic wild card” facing the country, a top Treasury official said Wednesday. Deputy Treasury Secretary Ken Dam said the treasury believes the economy is growing stronger. Factories are boosting production, consumers are continuing to spend and are helping along the recovery and inflation is tame, he noted. “Terrorism, however, remains an economic wild card,” Dam said in remarks to the World Economic Forum at the U.S. Chamber of Commerce. “Unfortunately, we are almost certain to be attacked again,” he said. Dam’s remarks follow a string of recent warnings by top Bush administration officials.
Labor leaders voted Wednesday to increase union dues to build the AFL-CIO’s campaign war chest by $25 million for November’s elections and the next presidential race. All 66 unions in the federation will be required to pay an increase of 4 cents a month for each of their members through July 2005 to fund political activities. Two unions opposed the hike. The increase is expected to raise more than $6 million a year on top of the 6.5-cent monthly tax per member that unions already pay to fund advertising, get-out-the-vote efforts and member education. The money does not go to candidates or parties.
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