SEC charges two former in-house Enron lawyers…Government says durable goods orders rebounded last month…Circuit City cutting more than 3,000 jobs…
The U.S. Securities and Exchange Commission has charged two former in-house lawyers at Enron with securities fraud. The SEC says Jordan Mintz, former general counsel of Enron’s global finance group, and Rex Rogers, former associate general counsel, have been charged in connection with Enron’s 1999 sale of an interest in a power project in Brazil to a partnership called LJM1. That partnership was controlled by former Enron Chief financial Officer Andrew Fastow, now serving six years in prison. Enron bought back LJM1’s interest in 2001, paying a profit even though the investment had fallen in value. The SEC alleges the transaction was designed to hide the asset from Enron’s balance sheet and was not disclosed in regulatory filings. The agency seeks financial penalties, as well as orders barring the two from serving as officers or directors of public companies.
The government says durable goods orders rebounded last month, but not as much as expected. The Commerce Department says orders for big-ticket manufactured goods rose 2.5 percent in February after falling sharply in January. But economists had been expecting a 3.5 percent increase. The February durable goods report shows the overall increase was largely due to a rebound in sales of commercial aircraft and autos. But, while aircraft orders soared, a key barometer of business equipment spending fell. Orders for non-defense capital goods excluding aircraft dropped by 1.2 percent, after plunging 7.4 percent in January. The report also shows durables, which are goods designed to last at least three years, fell 9.3 percent in January, revised down from a previous estimate of an 8.7 percent drop. The huge January decline was the biggest in six and a-half years.
Circuit City stores will cut costs by cutting more than 3,000 jobs. The consumer electronics retailer says it plans to lay off about 3,400 store workers and hire lower-paid employees to replace them. It also will trim about 130 corporate jobs. Circuit City says the store workers being laid off are earning “well above the market-based salary range for their role.” It says they’ll be replaced with employees who will be paid at the current market range. There’s no immediate word on how the layoffs will affect jobs in the Houston area. The company also plans to outsource its information technology infrastructure operations to IBM, a move that is expected to cut IT expenses by more than 16 percent. About 50 of Circuit City’s IT workers will move to jobs with IBM and remain on the Circuit City contract. The other 80 corporate positions will be cut.
The beleaguered housing market has been hit again, this time with an FBI investigation. Shares of Beazer Homes USA have plunged following the FBI announcement that it’s one of several agencies investigating possible fraud in the company’s mortgage lending practices and other financial transactions. A spokesman for the bureau’s Charlotte field office says Beazer is under investigation by the FBI and the U.S. Attorney’s Office in Charlotte, North Carolina, as well as the Internal Revenue Service and the Federal Department of Housing and Urban Development. Beazer, which has suffered hefty losses amid a downturn in the housing market, says it “cannot comment on or verify any investigation.”