Business Digest


July 14, 2005

In the Region

No. 1 proxy adviser to buy rival in D.C. for over $10 million

Institutional Shareholder Services, the Rockville firm that advises investors on how to vote on proxy issues, is acquiring a respected Washington research firm that is often viewed as a rival in the business.

ISS, the nation's largest proxy advisory firm, will pay more than $10 million to acquire the Investor Responsibility Research Center, which has been struggling to compete since becoming a for-profit entity four years ago.

The deal, expected to close within days, is a surprise, given the longstanding competitive tension between the two proxy firms. Investor Responsibility Research has stressed the impartiality of its research while Institutional Shareholder has drawn criticism for advising both investors and corporate clients.

The majority of IRRC's employees will be offered jobs at ISS. As a result of the deal, a new independent, nonprofit think-tank will be formed. Proceeds of the sale will go toward creating an endowment to finance the institute.


U.S. won't pursue perjury counts against Scrushy

U.S. prosecutors yesterday dropped their appeal of dismissed perjury counts against former HealthSouth founder Richard M. Scrushy.

Last month, a federal jury in Birmingham, Ala., found Scrushy not guilty of 36 criminal charges accusing him of directing a $2.7 billion fraud at his company from 1996 to 2002.

Fifteen HealthSouth executives pleaded guilty, including five former finance chiefs who testified they discussed inflating profits with Scrushy.

During the trial, U.S. District Judge Karon O. Bowdre dismissed three counts of perjury and one for obstruction of justice. U.S. Attorney Alice Martin said after the verdict that the government would appeal the dismissed charges, but yesterday Martin announced her decision to abandon her pursuit of another trial in a one-sentence press release.

Scrushy still faces investor lawsuits and a civil fraud suit filed by the Securities and Exchange Commission on March 19, 2003, just days before HealthSouth's board fired him. On Tuesday, Delaware Chancery Judge Leo Strine told HealthSouth investors Scrushy still must reimburse the company for a $25.2 million loan he repaid in shares which later dropped in value.

Bank of America is dropped from suit over Parmalat

Bank of America Corp. persuaded a federal judge in New York yesterday to dismiss claims against it in an investor lawsuit that accused banks of helping Parmalat Finanziaria SpA understate its debt and overstate its assets.

U.S. District Judge Lewis Kaplan also dismissed some claims against Citigroup Inc., Credit Suisse First Boston and Banca Nazionale del Lavoro, but allowed other investor claims against these banks to go forward.

Parmalat, Italy's largest food company, filed for bankruptcy protection in Italy on Dec. 24, 2003. Italian authorities subsequently indicted Parmalat executives and others. In the lawsuit, investors claim the banks and auditing firms allowed Parmalat to understate its debt by almost $10 billion and overstate its consolidated net assets by $16.4 billion.

XM Satellite Radio to buy owner of wireless licenses

XM Satellite Radio Inc., the No. 1 U.S. satellite radio company, said yesterday that it will buy WCS Wireless, a private company that owns airwaves, for 5.5 million shares of common stock.

WCS's wireless spectrum licenses cover 15 of the 20 biggest metropolitan areas.

XM Satellite said it can use the airwaves to expand its service with video and data offerings.

Bulletproof textile maker settles suits for $29 million

Japanese textile manufacturer Toyobo Co. is paying $29 million to settle class action litigation in the United States that sought damages from the company for bulletproof vests suspected of defects.

Toyobo said yesterday that received a preliminary approval for the settlement from the Mayes County District Court in Oklahoma. The pact covers class action suits in six states - West Virginia, Missouri, Louisiana, New Jersey, California and Michigan, in addition to Oklahoma, where the case was consolidated.

Members of the class potentially include individuals, municipalities and police agencies across the country who wore or paid for the vest. The case involves some 150,000 bullet-resistant vests.

NYSE seat holders to get look at merger data

The New York Stock Exchange must turn over documents and analyses related to its pending acquisition of Archipelago Holdings Inc. to three seat holders who are suing to block the deal, a New York state judge ruled yesterday.

Lawyers for seat holder William Higgins, a longtime critic of the exchange, successfully argued that as an owner of a seat, which represents a stake in the exchange, he should be able to examine the documents the NYSE's board of directors used in voting to approve the merger with the electronic stock market.

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