NEW YORK - Financial services giant Citigroup has agreed to pay $2.65 billion to settle class-action suits by investors who bought WorldCom Inc. securities before the telecommunications company's bankruptcy filing in 2002.
It was the second biggest securities litigation deal ever after a $3.2 billion settlement by services giant Cendant Corp. in 2000, according to New York state Comptroller Alan G. Hevesi. Citigroup's brokerage division was a key backer of WorldCom securities before WorldCom filed for the biggest bankruptcy in history in July 2002 amid accounting irregularities.
Hevesi said other defendants in the class-action suits, including J.P. Morgan Securities and Bank of America Securities, have been given 45 days to match the Citi settlement. If they agree to similar settlements, that could give WorldCom investors access to another $2.8 billion, Hevesi said.
NEW YORK -- Interest rate fears drove a major selloff on Wall Street Monday, with the Dow Jones industrial average closing below 10,000 for the first time since Dec. 10 and sending all three major indexes to their lows for the year.
The dread that has sent stocks tumbling over the past four weeks intensified after Friday's employment report from the Labor Department - the U.S. gained 288,000 new jobs in April. Investors feared the news would prompt the Federal Reserve to raise rates as early as next month, and selling spread around the globe Monday, sending overseas markets tumbling as well.
Since Wednesday's close, the three major indexes have each lost more than 3 percent of their value, capping a four-week spasm of selling as economic indicators grew more positive.
McLEAN, Va. - MCI plans to eliminate 7,500 jobs this year - about 15 percent of its work force - to cut costs as its struggles with weak revenues that resulted in a quarterly loss of $388 million, the company said Monday.
The company's release of quarterly earnings was the first for the company since it emerged last month from nearly two years of bankruptcy protection and changed its name from WorldCom.
The $388 million loss compared to a net profit of $52 million in the year-ago quarter. The company said the weaker performance stemmed from intense price competition in the industry that has crimped revenues.
ATLANTA - Delta Air Lines said Monday it may have to file for bankruptcy if it doesn't get significant wage cuts from pilots, the first time the struggling carrier has publicly linked the two issues in a regulatory filing.
The Atlanta-based company has said repeatedly that it would fight to avoid bankruptcy and has been cautious in the words it uses when discussing the possibility. Asked about it at Delta's annual shareholder meeting last month, chief executive Gerald Grinstein said only that bankruptcy would be undesirable.
But in a quarterly report with the Securities and Exchange Commission on Monday, Delta said in part: "If we cannot achieve a competitive cost structure, regain sustained profitability and access the capital markets on acceptable terms, we will need to pursue alternative courses of action ... including the possibility of seeking to restructure our costs under Chapter 11."
BRUSSELS, Belgium -- Aiming to boost world trade talks, the European Union offered Monday to drop billions of dollars in subsidies on farm exports - but only if the United States, Japan, Canada and other rich nations make similar concessions.
EU trade commissioner Pascal Lamy said the EU was ready "go the extra mile" to get a midterm deal by July at the World Trade Organization.
"We are ready to show flexibility," Lamy told reporters. "Everything is on the list, everything is on the table."
But he added a further dismantling of EU export subsidies would depend on a "mutual disarmament" from other key agricultural exporters like the United States, Australia and Canada.
HARTFORD, Conn. -- The top executives of Cendant Corp. for years managed a conspiracy to inflate the company's earnings, enriching themselves and costing investors billions of dollars, prosecutors told a jury Monday during opening statements of their fraud trial.
Cendant's former chairman, Walter Forbes, and former vice chairman, E. Kirk Shelton, are accused of inflating revenue by $500 million at Cendant's predecessor, CUC International, to drive up the stock price.
Both have pleaded innocent to charges of conspiracy, securities fraud, mail fraud, wire fraud and lying to the Securities and Exchange Commission. Forbes also is charged with insider trading for selling $11 million worth of Cendant stock a few weeks before the accounting scandal was made public. The trial may last as long as six months, prosecutors said.
WASHINGTON -- The Federal Reserve fined Switzerland's largest bank, UBS AG, $100 million Monday for allegedly sending dollars to Cuba, Libya, Iran and Yugoslavia in violation of U.S. sanctions against those countries.
UBS operated a trading center for dollars in its Zurich headquarters under contract with the Federal Reserve of New York, to help the circulation of new U.S. notes and the retirement of old ones. A condition for the Swiss bank was not to deliver or accept dollar notes through the depot to or from banks in countries under U.S. trade sanctions.
The bank, which has gotten out of the business of trading international banknotes, said Monday that some employees have been dismissed and disciplinary measures were taken against others.
HARRISBURG, Pa. -- New World Pasta, the nation's largest maker of dry pasta products, on Monday announced that it filed for Chapter 11 bankruptcy protection.
The company, which is struggling with high debt and internal accounting problems that cropped up soon after it purchased one of its largest competitors, also announced that it obtained a commitment for a $45 million in financing that would allow it to operate while in bankruptcy.
New World, whose boxed-pasta brands include Creamette, Prince, Ronzoni, and San Giorgio, has not posted a profit since 2001 and has not filed a quarterly financial statement with the SEC since mid-2001.
WASHINGTON -- The Environmental Protection Agency announced regulations Monday aimed at cutting pollution from diesel-powered farming and construction equipment and other off-road machinery by more than 90 percent over the next six years.
The EPA regulation, which will be formally signed Tuesday, requires refiners to nearly eliminate sulfur in diesel fuel used in construction, farming and other off-road activities by 2010 and for use in large ships and locomotives by 2012.
As a result of the cleaner fuel and the ability to build cleaner engines the amount of smog-causing chemicals and fine soot from such vehicles and machinery is expected to be reduced by more than 90 percent, according to the EPA.
Stock prices finished sharply lower Monday. The Dow Jones industrial average fell 127.32, or 1.3 percent, to 9,990.02 in heavy volume on the New York Stock Exchange. At one point, the Dow had been down 183.11. It was the lowest close for the Dow since Dec. 10, the last time the Dow closed below 10,000. The Standard & Poor's 500 index was down 11.58, or 1 percent, at 1,087.12, its lowest point since Dec. 17. The Nasdaq composite index dropped 21.89, or 1.1 percent, to 1,896.07. The Nasdaq last closed below 1,900 on Nov. 21.
Nymex light, sweet crude oil futures set for June delivery settled down $1 to $38.93 a barrel.
On London's International Petroleum Exchange, June Brent blend crude oil futures settled down $1.03 at $35.97 a barrel, also off 13-year highs.
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