Raytheon Faces SEC Charge on Disclosure
Raytheon Co. will be charged by the Securities and Exchange Commission with giving profit forecasts to stock analysts in 2001 before telling the public, in the agency’s first case to enforce Regulation Fair Disclosure, people familiar with the matter said Tuesday.
Raytheon would not pay a fine or admit guilt in a settlement under discussion between the SEC and the fourth-biggest U.S. defense contractor, people close to the case said. The settlement calls for Raytheon to be subject to tougher sanctions if the company breaks the rule again, they said.
The potential settlement comes nearly two years after the SEC enacted the fair-disclosure rule, which bars companies from selectively disclosing market-moving news before publicly announcing it.
Some securities lawyers said the SEC isn’t pushing for a stiff penalty in enforcing the rule, which was opposed by SEC Chairman Harvey L. Pitt when he represented brokerages as a private lawyer, before his appointment to the SEC last summer.
“It’s a slow reaction on the SEC’s part, and a very mild reaction, but it’s probably intended as a first-time reminder to U.S. companies, which are largely complying with the rule,” Southern Methodist University law professor Alan Bromberg said.
David Polk, a spokesman for Lexington, Mass.-based Raytheon, and SEC spokesman John Heine declined to comment.
Also Tuesday, Raytheon said it named William Swanson as president. He had been head of the company’s electronic systems unit.
Raytheon shares rose 82 cents to $35 on the New York Stock Exchange.
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Cost Cutting Helps Merrill Post a Profit
Merrill Lynch & Co. said Tuesday that its profit rose for the first time in six quarters after the brokerage giant cut costs more than its rivals amid a continuing slump in new stock sales and mergers.
Net income in the second quarter rose 17% to $634 million, or 66 cents a share, from $541 million, or 56 cents, a year earlier. The latest results included an expense of $111 million Merrill incurred to settle charges that its analysts misled investors to win and retain investment banking assignments.
The results beat the average analyst estimate of 58 cents.
Second-quarter revenue fell 11% to $5 billion, Merrill said. But expenses dropped 15% to $4 billion.
The company eliminated about 15,000 jobs last year, and may cut more positions, Chief Financial Officer Thomas Patrick said.
He warned that sales in the year’s second half probably would not be as strong as in the first half because of “seasonal factors.”
Merrill’s stock gained 40 cents to $37.35 on the New York Stock Exchange. It’s down 28% this year.
Bloomberg News
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Schwab Results Are Flat in ‘Difficult’ Market
Discount brokerage Charles Schwab Corp. on Tuesday posted another quarter of lackluster earnings amid sharp declines in customer stock trading, and the firm said it was under pressure in a market environment moving from “difficult towards brutal.”
Schwab, which has 8 million customers, earned $98 million, or 7 cents a share, in the second quarter. That compared with $102 million, or 7 cents, a year earlier.
Revenue dipped to $1.05 billion from $1.07 billion.
Though the results met analysts’ expectations, Schwab shares fell 31 cents to $10.47 on the New York Stock Exchange amid downbeat comments from the firm’s chief financial officer, Christopher Dodds.
“We would characterize the quarter as a credible financial performance, but not spectacular, in an environment that is trending away from difficult towards brutal,” Dodds said. “In terms of an environment that translates into revenues and profits, we certainly continue to face a lot of pressure.”
To help lower costs, the company has cut 2.5% of its staff since the beginning of the year, and Dodds said Schwab will continue to reduce its work force.
Reuters
