Head of Telefonica May Step Down

Telefonica President Juan Villalonga, under investigation for possible insider-trading violations, reportedly has reached an agreement in principle with key shareholders to resign. The Spanish telecommunications giant declined to comment on the report in the newspaper El Mundo. The paper said Villalonga could announce his resignation in a Telefonica board meeting scheduled for today. The meeting could be delayed a few days, however, because Villalonga’s mother died Monday. El Mundo rocked Spain’s business and financial community a month ago by reporting that the government had reopened a probe it conducted two years ago into allegations that in January 1998 Villalonga bought options on Telefonica shares while negotiating alliances with the U.S. firm MCI WorldCom, which has since changed its name to WorldCom. At the time, stock market regulators said they found no evidence of irregularities. Villalonga denied any wrongdoing, saying he bought the options a full two months before the alliance with WorldCom was announced. El Mundo said that Villalonga and two banks that are core shareholders in Telefonica--Banco Bilbao Vizcaya Argentaria and La Caixa--have reached an agreement in principle for Villalonga to resign.