Business Digest


August 20, 2004

In The Region

Zoo fires firm building exhibit for polar bears

The Baltimore Zoo said yesterday that it fired the company building the Polar Bear Watch exhibit for failing to meet deadlines and not getting the inspections needed to finish the job.

Zoo officials described the decision to fire ValleyCrest Landscape Development Inc. as a necessary but last resort. The firm's parent, ValleyCrest Companies of California, declined to comment, saying it is still in discussions with the zoo.

One of the zoo's polar bear yards opened in October. The polar bears spend their days in that yard and their nights in an open-air area that is not in the public's view.

The area in question includes a portion of the polar bear exhibit that will give zoo visitors an underwater view of the polar bears in their pool. The zoo has filed a complaint with the company that issued a performance bond for the work and is responsible for ensuring that the job gets done.


NASD suspends financial services firm over trading

For the first time the National Association of Securities Dealers has prohibited a regulated financial services firm from opening mutual-fund accounts for new clients for 30 days - for allegedly facilitating deceptive market-timing practices.

National Securities Corp. of Seattle also failed to have an adequate supervisory system to prevent deceptive market timing and late trading, the NASD said yesterday.

National also was fined $300,000 and ordered to pay almost $300,000 in restitution to the funds that were affected by the deceptive market timing. The company also was ordered to revise its systems to correct supervisory and e-mail retention deficiencies.

National President Michael A. Bresner was fined $25,000 and received a one-month suspension. David M. Williams, the firm's former chief operating officer, also was fined $25,000.

Ohio suit accuses Best Buy of deceptive practices

Ohio authorities sued Best Buy Co. Inc. yesterday, alleging that the electronics retailer engaged in unfair and deceptive business practices.

Ohio Attorney General Jim Petro said his office has received hundreds of complaints over several years, the most common allegations being that the retailer repackaged used goods and sold them as new, and failed to honor rebates, refund and exchange programs and extended service contracts.

The complaint, filed in state court in Columbus, asks a judge to order Best Buy to comply with Ohio's consumer protection laws, reimburse customers who lost money and pay a civil penalty of $25,000 for each violation of the state's Consumer Sales Practices Act.

Best Buy declined to comment on the lawsuit, pointing to a policy against discussing pending litigation.

Software firms are ruled not liable for file swapping

Grokster Ltd. and Stream- Cast Networks Inc. are not liable for the swapping of copyright content through their file-sharing software, a federal appeals court in San Francisco ruled yesterday in a blow to movie studios and record labels.

Among other things, the 9th U.S. Circuit Court of Appeals said the suppliers of the free peer-to-peer software, unlike Napster, were not liable for illegally swapped music and movies online because they don't have central servers where computer users can access copyrighted material.

"In the context of this case, the software design is of great import," Judge Sidney R. Thomas wrote for the unanimous three-judge panel, which upheld a lower court ruling that dismissed the bulk of the lawsuit brought by movie studios and record labels.

The panel noted that the software firms simply provided software for individual users to share information over the Internet, regardless of whether that shared information was copyrighted.

Bank of America hires senior SEC official

Bank of America Corp., one of the first companies ensnared in recent mutual fund trading probes, hired the deputy chief of the Securities and Exchange Commission's mutual-fund division.

Cynthia Fornelli, 43, who oversees the $7.6 trillion mutual-fund industry, will become a senior vice president at the bank's headquarters in Charlotte, N.C. She will be in charge of risk assessment and ensuring the bank's compliance with securities laws. At the SEC, Fornelli helped lead the most extensive overhaul of mutual fund oversight since the 1940s.

Bank of America has come under SEC scrutiny for its mutual-fund trading, analyst research and for withholding documents during an insider-trading investigation. In September, the bank was accused by New York Attorney General Eliot Spitzer of permitting mutual-fund trading violations that harmed long-term investors.

Labor board to investigate union claim against airline

A labor relations board plans to investigate a Teamsters' claim that Frontier Airlines improperly interfered with a union representation vote involving a small group of stock clerks.

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