TOP STORIES -- Aug. 22-27

Oil Prices Drop Nearly 10% for the Week

Crude oil prices posted their biggest weekly decline in more than a year only days after flirting with $50 a barrel, and analysts say prices could drop further if tensions in oil-rich Iraq continue to stabilize.

Despite edging up 8 cents a barrel Friday, to $43.18, oil for October delivery on the New York Mercantile Exchange fell $4.69 a barrel, or 9.8%, for the week. It also was crude oil’s first weekly decline since late June.

But gasoline prices continued edging higher after falling for most of the summer. Pump prices in Southern California climbed a few cents a gallon last week, as they typically do before the Labor Day weekend, and prices of gasoline futures contracts rose in New York trading.

Oil’s surge was attributed to tight world supplies and a rash of disruptions in several exporting nations that raised fears of a major interruption in global oil production and delivery. Heavy speculation by hedge funds and other institutional investors also helped lift prices.

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State Court Allows Class Actions on Overtime Pay

In a closely watched labor law case, the California Supreme Court cleared the way for a class-action lawsuit brought by Sav-on Drug Stores workers who say they were misclassified as managers and improperly denied overtime. The unanimous ruling overturned a lower-court decision that would have discouraged such suits.

Plaintiffs’ attorneys maintain that many workers, despite having titles such as “store manager,” spend much of their day doing non-managerial tasks such as stocking shelves or tending a cash register, rather than overseeing any of the business.

A Sav-on spokeswoman declined to comment on the ruling.

A trial judge in Los Angeles agreed to certify the suit as a class action, a move appealed by Sav-on. The state Court of Appeal reversed the trial judge. In overturning the Court of Appeal’s decision, the high court judges said workers had presented enough evidence of common grievances to have their suit certified as a class action.

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U.S. Launches Inquiry of Alleged Piracy Ring

The Justice Department said it had launched an undercover criminal probe of a members-only group that allegedly traded movies, songs, games and software over the Internet.

The move came as the Recording Industry Assn. of America said it had filed copyright- infringement lawsuits against 744 file sharers, bringing the total sued to 4,680.

The actions by the Justice Department and RIAA directly affect a tiny fraction of millions of file sharers, but they signal that the legal risks of unauthorized file sharing are intensifying.

Atty. Gen. John Ashcroft said the FBI had executed search warrants in Texas, New York and Wisconsin against five people and an Internet service provider linked to a group known as the Underground Network.

No charges were filed, but agents seized computers, software and related equipment in the raids.

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Beverly Hills Brokerage Faces SEC Charges

Federal regulators charged a Beverly Hills-based brokerage firm and three of its executives with securities fraud, alleging that the company arranged for clients to engage in market timing or late trading of more than 600 mutual funds.

The Securities and Exchange Commission’s civil suit against JB Oxford Holdings Inc. is the latest case in an effort to stamp out fraudulent fund trading.

The SEC says Oxford’s processing unit, National Clearing Corp., earned almost $1 million from June 2002 to September 2003 for arranging market-timing and late-trading fund transactions for institutional clients.

The SEC alleges that Oxford and three current or former executives committed securities fraud. The suit, filed in U.S. District Court in Los Angeles, seeks unspecified financial penalties.

Attorneys for Oxford didn’t return phone calls.

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Fund Chief Will Pay $800,000 to Settle Probe

Garrett Van Wagoner, the mutual fund manager who personified the frenzied stock market of the late 1990s, agreed to pay $800,000 to settle a federal probe into how he valued the securities in his funds.

The Securities and Exchange Commission alleged that Van Wagoner misled shareholders about his holdings of so-called illiquid stocks -- shares issued by private firms that can skyrocket if an initial public offering is successful but can become worthless if the enterprise falters.

San Francisco-based Van Wagoner told shareholders that he would devote no more than 15% of assets to the risky securities.

According to the SEC, however, he intentionally understated the value of his illiquid stocks so that he could load up on more.

Van Wagoner neither admitted nor denied the charges. He agreed to be barred from serving as an officer or director of a fund for seven years but still can manage his three funds at Van Wagoner Capital Management Inc.

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Pharmacies Sue Drug Makers Over Pricing

A group of California pharmacies sued more than a dozen drug makers, accusing them of conspiring to keep U.S. prices well above those for the same drugs in Canada and other countries.

The lawsuit alleges that the firms broke state antitrust laws by maintaining “artificially high prices for their drugs in the U.S., including California,” and blocking lower-priced imports.

The suit was filed in Alameda County Superior Court in Oakland by 14 independent pharmacies, including four in Southern California.

Most of the largest pharmaceutical makers are named as defendants, including Pfizer Inc., Merck & Co., AstraZeneca and Irvine-based Allergan Inc.

AstraZeneca “believes the claims are without merit,” a spokeswoman said. A Pfizer spokesman also said the allegations were without merit. A Merck spokesman said executives had not seen the suit. Allergan did not respond to requests for comment.

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Williams-Sonoma Earnings Increase 55%

Williams-Sonoma Inc. reported a better-than-expected 55% jump in its fiscal second-quarter profit, fueled by sales of furniture and other household goods at its Pottery Barn chain.

It was the latest sign that retailers marketing to higher-end consumers are prospering while major discount stores and mainstream apparel chains struggle.

Williams-Sonoma, which also owns the Hold Everything and Pottery Barn Kids brands, reported net income of $27.6 million, or 23 cents a share, for the quarter ended Aug. 1, up from $17.8 million, or 15 cents, a year earlier. The latest profit beat analysts’ expectations of 19 cents.

Revenue jumped 19% to $689.6 million.

Sales at Pottery Barn stores open for at least a year climbed 10.2% in the second quarter.

Analysts said that Pottery Barn stores were better stocked than usual this year and that the product lines were more popular with consumers. Mortgage refinancings and a sizzling housing market also have helped drive sales of home furnishings.

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Cities Attempt to Halt UAL Deal With Oakland

Los Angeles and San Francisco are trying to plug a loophole that is costing the cities millions of dollars a year in lost tax revenue while providing United Airlines with a windfall.

The loophole allows United to pay all state sales taxes on the fuel it pumps in California exclusively to the city of Oakland. Oakland returns 65% of its share of that money to UAL Corp.-owned United. (Cities and counties receive 1 percentage point of the state’s 7.75% sales tax.)

A 1998 law requires that state sales taxes be paid at a single location when a retailer has only one location in California, and United established a unit last year at the Oakland airport whose sole function is to sell jet fuel to itself.

Assemblyman Leland Yee (D-San Francisco), author of a bill to close the loophole, said Oakland and United had “their hands in the cookie jar.”

The biggest losers are the city of Los Angeles and L.A. County, home to Los Angeles International Airport, and the city of San Francisco and San Mateo County, which operate San Francisco International Airport.

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S&P; Boosts California Credit Rating to A

California’s financial outlook got a vote of confidence from credit-rating firm Standard & Poor’s, which lifted the state’s bond grade three notches, citing a better economy and the use of long-term borrowing to stave off a potential budget crisis.

Although its revised credit rating remains the lowest among the states, California’s upgrade was good news for owners of its tax-free bonds because the shift could bolster demand for the securities, analysts said. Taxpayers also may benefit because stronger demand for the state’s bonds could allow it to pay lower interest rates over time.

S&P; boosted the rating on about $33 billion of the state’s general obligation bonds to A from a near-junk level of BBB. It said the state’s sale of $11.3 billion in deficit-plugging long-term bonds in spring, as approved by voters, allowed an “easing of immediate liquidity pressure” because proceeds were used to pay short-term debt.

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Enron Spawned Trouble for Northwest Salmon

Add Northwest salmon to the long list of Enron Corp.’s victims.

A fresh round of evidence suggested that Enron traders shipped emergency power out of California, even as hydroelectric dams in the Pacific Northwest -- struggling to ease the energy crisis -- were running full tilt.

Water that normally would have eased the fish away from massive hydropower turbines instead was used to make electricity, further endangering the fish.

More broadly, said Sen. Maria Cantwell (D-Wash.), transcripts released last week portrayed a regional strategy in which the Houston energy firm exploited efforts to prevent an economic calamity in California during the 2000-01 market meltdown.

In 2001, salmon deaths related to the energy crisis became a major public concern as drought conditions intensified in the Northwest. The Bonneville Power Administration was sending as much water as possible to its hydropower turbines, sucking a great many salmon to their deaths.

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