TOP STORIES--APRIL 21-26

Andersen Bid to Reopen Settlement Talks Fails

A last-ditch effort by accounting firm Arthur Andersen to restart talks with federal prosecutors on settling its criminal indictment failed, setting the stage for the trial on an obstruction-of-justice chargeto start May 6 in Houston.

Meanwhile, a bidding war was developing for various pieces of Andersen, crippled by the federal charge that it destroyed documents sought in the investigation of its accounting work for bankrupt Enron Corp. PricewaterhouseCoopers had entered talks to buy scattered portions of the firm, according to people familiar with Andersen’s efforts to sell offices and practice groups to rivals. Previously, PricewaterhouseCoopers had avoided bidding because of its status as the largest U.S. accounting firm.

And after a conference call with Andersen’s senior executives, BDO Seidman looked to be the front-runner for Andersen’s middle market business practice. Grant Thornton and McGladrey & Pullen also have talked to Andersen about purchasing the firm’s middle market business practice.

The winner probably will replace Andersen as the nation’s fifth-largest accounting firm.

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Gates Takes the Stand in Microsoft Case

The decision to put brilliant but volatile Microsoft Corp. Chairman Bill Gates on the stand in the Microsoft Corp. antitrust trial turned out to be not so risky after all.

After three days of testifying in U.S. District Court, experts said, Gates--the richest man in the world--succeeded in putting a human face on his company’s complex antitrust battle with California and eight other states.

The antitrust case, which experts say probably will set legal precedents and affect the technology industry, is scheduled to conclude sometime next month.

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House OKs Bill for Better Look at Firms’ Finances

The Republican-led House, in the strongest congressional response yet to Enron Corp.’s collapse, passed a bill that would give investors a fuller and more accurate picture of a company’s finances, especially from outside auditors.

But Democrats who control the Senate contended the House bill doesn’t go far enough, setting up an election-year fight that could hinder chances of far-reaching reforms.

The measure, approved after months of hearings on Enron’s descent into bankruptcy and the role in its fall played by its indicted auditor, Arthur Andersen, would create a new accounting oversight board and impose new financial disclosure requirements on publicly traded companies.

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Merrill Hires Giuliani to Help It Negotiate

Merrill Lynch & Co. has hired former New York Mayor Rudolph W. Giuliani to help it negotiate with the state attorney general’s office over charges of deception and conflict of interest in Merrill’s stock-research operation.

Observers said tapping Giuliani shows how seriously Merrill takes the allegations by New York Atty. Gen. Eliot Spitzer and the damage they could do to the No. 1 brokerage.

Giuliani, a former U.S. attorney in New York who aggressively prosecuted insider trading and other securities cases in the 1980s, opened a private consulting business, Giuliani Partners, after ending his term as mayor Jan. 1.

Giuliani has been offering Merrill advice on how to make structural changes to enhance its research unit’s independence from its investment-banking operation. He also has been authorized to assist in negotiations on a broad settlement with Spitzer’s office.

Spitzer, meanwhile, has expanded his investigation of analyst conduct to include other top Wall Street firms, including Morgan Stanley, CS First Boston and Goldman Sachs.

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BofA Shareholders Seek Curb on Severance Pay

Shareholders of Bank of America Corp. approved a resolution asking the company’s board to limit severance pay for executives.

The measure, sponsored by the Teamsters pension plan and opposed by BofA’s management, passed at the banking giant’s annual meeting by a 51% vote--unprecedented for such proposals at large companies, where shareholders typically accede to management’s wishes.

The resolution asks the bank’s directors to require a shareholder vote on any severance agreements worth more than twice an executive’s annual salary and bonus.

The measure is only a request, which the company’s board could reject or modify.

Nonetheless, shareholder activists said the victory marks an important milestone in their campaign to send a strong message to corporate America about perceived abuses in corporate governance.

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Micron to Buy Much of Hynix for $3.6 Billion

After a long and uncertain courtship, Micron Technology Inc. agreed to acquire the bulk of South Korea’s Hynix Semiconductor Inc. to create the world’s largest maker of memory chips in a deal valued at $3.6 billion in cash and stock.

The merger, which requires approval from antitrust regulators and the creditors of financially ailing Hynix, would create a juggernaut that would control one-third of the $11-billion global market for computer memory.

It also would further consolidate a troubled industry characterized in recent years by plunging prices and tepid demand from personal computer manufacturers.

If the Micron deal goes through, the other remaining major memory makers would be Samsung Electronics Co. and Infineon Technologies.

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Ovitz in Talks to Sell or Merge Talent Firm

Michael Ovitz is negotiating to sell or merge his Hollywood talent management company with one of a number of entertainment companies, including the Firm, which specializes in talent management in the music industry, according to sources close to the talks.

Disappointed that his original vision for a broad-based entertainment venture never materialized, Ovitz, former president of Walt Disney Co. and a founding partner of Creative Artists Agency, has been trying for several months to sell his stake in Artists Management Group or merge it with another entertainment company.

Though the current negotiations are considered serious, there remains a strong possibility that Ovitz will not close a deal any time soon, sources said.

Partners at the Firm could not be reached for comment. AMG declined to comment.

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7 Blacks Accuse Del Taco of Racial Discrimination

One current and six former African American employees of Del Taco Inc. are accusing the nation’s second-largest Mexican food chain of turning a blind eye to repeated race-based harassment from some Latino workers.

The suit, filed in Los Angeles, alleges that the Laguna Hills-based company tolerated Latino employees’ verbally abusing some blacks, passing them over for promotions in favor of Latinos and firing blacks and replacing them with undocumented Latino workers.

Those who complained about their poor treatment lost their jobs, according to the suit, which seeks unspecified damages including lost wages, punitive damages and reinstatement.

Closely held Del Taco, which has 395 restaurants in 10 states, said it had received the lawsuit document but declined to comment.

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Repetitive-Motion Injury Rate Up in Some States

A decade-long decline in the rate of repetitive-motion injuries in the workplace slowed to a near-standstill in 2000 and the rate even climbed in some states, including California, according to an analysis of federal data by the AFL-CIO.

The national labor federation’s annual report on workplace injuries also noted that although job fatalities declined overall, they increased among Latino workers. The on-the-job fatality rate in 2000 for Latinos was 5.6 per 100,000, the highest in at least five years.

The report was highly critical of the Bush administration’s record on worker protection, particularly its repeal of a short-lived ergonomic standard that recently was replaced with voluntary compliance guidelines.

An administration spokeswoman noted that the trends cited in the AFL-CIO report predate President Bush’s inauguration.

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For a preview of this week’s business and economic news, please see Monday’s Business section.