Business Digest


April 14, 2005

In the Region

Judge grants trial in Allegheny's spat with Merrill Lynch

A federal judge in Manhattan ruled yesterday that the fraud and contract claims accusing Merrill Lynch & Co. Inc. of overstating the performance of its Global Energy Markets when the company sold the unit to Allegheny Energy Inc. will proceed toward trial.

In the same ruling, U.S. District Judge Harold Baer said Allegheny must pay Merrill $115 million plus interest stemming from a dispute over the transaction.

The decision clears the way for Allegheny's fraud and contract case to go to trial, which is scheduled for next month. Merrill will get the $115 million if Allegheny loses its case or is awarded no damages. Otherwise, the $115 million will be offset by any damages Allegheny wins from Merrill.

Greensburg, Pa.-based Allegheny, formerly of Hagerstown, is a holding company that provides electric power to customers in Maryland, Pennsylvania, Virginia, West Virginia and Ohio.

Black & Decker closing Fayetteville, N.C., plant

About 675 workers will lose their jobs when Black & Decker Corp. closes its Fayetteville, N.C., plant and moves operations out of state by December 2006, the company said yesterday.

The plant's operations will move to Jackson, Tenn., and Reynosa, Mexico, the company said.

The Fayetteville plant, which opened in 1967 and had up to 1,500 employees in the mid-1990s, will begin cuts over the next three months.

PNC to give Riggs patrons in D.C. free ATM use

PNC Financial Services Group Inc., which is buying Riggs National Corp. for $652 million, said yesterday that it will offer free use of automated teller machines to Riggs Bank customers as it expands into the Washington region.

PNC said it will refund surcharges when customers with certain types of accounts use ATMs of other banks throughout the United States. The offer is exclusive to Riggs customers in Washington and is expected to take effect May 13 after PNC completes the acquisition.

Susquehanna brand, logo going on 4 bank divisions

Susquehanna Bancshares Inc. will convert four subsidiary banks to the parent company's brand and logo this week.

The subsidiaries are Citizens Bank of Southern Pennsylvania, First American Bank of Pennsylvania, Farmers & Merchants Bank and Trust, and Susquehanna Bank. In all, 58 branches will undergo changes to their signage and legal names, including 40 in Maryland.

The move will allow customers to better find branches where they can access their accounts, the company said. Customers began receiving mailings about the changes in February.


Greenberg shifted $2.14 billion in AIG shares to his wife

Maurice R. "Hank" Greenberg transferred $2.14 billion of American International Group Inc. shares to his wife four days before an accounting investigation forced his ouster as chief executive officer of the insurer.

Greenberg, who ran AIG for almost 40 years before stepping down last month, made the gift of 41.4 million AIG shares to Corinne P. Greenberg on March 11, according to a regulatory filing made yesterday. The shares represented 96 percent of the former CEO's direct ownership stake in the New York-based company, the world's largest insurer.

The shift might have been an attempt to guard the couple's wealth from lawsuits that might stem from the investigation by New York Attorney General Eliot Spitzer and the Securities and Exchange Commission, said former federal prosecutor Christopher Bebel. AIG has lost more than $56 billion of market value since the company disclosed accounting subpoenas on Feb. 14.

GM MasterCard breach grows, includes Visa USA

The scope of a computer system breach at a national retailer widened yesterday to involve the customers of a second major credit-card company but those companies refused to divulge the name of the retailer.

The security breach surfaced this week when HSBC North America began notifying 180,000 of its GM MasterCard customers that their credit card information might have been compromised. HSBC, which issues the GM cards, urged each customer to replace their card as quickly as possible.

MasterCard officials said they uncovered the breach and informed member banks of its existence, but they said it was up to each bank to determine how it wanted to respond.

A second company, Visa USA, said late yesterday that it had been notified by the same merchant that a data security breach had occurred, potentially exposing the credit-card data of Visa customers to thieves. Visa said it would begin working with the merchant, law enforcement officials, and member banks to monitor and prevent card-related fraud.

MasterCard and Visa said they would not disclose the name of the U.S.-based retailer where the breach occurred.

Federal judge is critical of Scrushy investigators

The judge who dismissed perjury charges against HealthSouth Corp. founder Richard M. Scrushy said yesterday that she did so because the Securities and Exchange Commission engaged in "cloak and dagger activities" that violated his rights.

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