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Chart: Trizec Stock Price

Joel Klein may be best known for prosecuting the government's case against Microsoft (MSFT), but he wasn't versed in antitrust law when he came to the Justice Dept. in 1996. And few friends were surprised when the assistant U.S. attorney general left law in 2001 for business.

Now the outgoing chairman of Bertelsmann Inc. is venturing even further afield. On July 29, Mayor Michael Bloomberg tapped him to head New York City's public school system. Other than attending and teaching classes at city schools, he has little experience relevant to running a $12 billion education colossus. What's more, New York's schools are famous for their resistance to change.

But Klein has a few things going for him. He's a quick study with a genuine love of the public schools. "I'm going to put together a team that brings together the requisite skill set that we need," he says.

And Klein's time at Justice might even come in handy. Some New Yorkers think a little trustbusting is exactly what this monopoly needs. Corporate reform got a significant boost on July 31, when General Electric (GE) joined the parade of companies pledging to expense stock options. Along with that move, which could ultimately trim 3 cents a share from annual earnings over the next few years, GE Chairman Jeffrey Immelt certified GE's financial reports two weeks ahead of the Securities & Exchange Commission's deadline. Immelt also announced that GE will require senior executives to hold shares for at least one year after exercising stock options and will restrict new board appointments to independent directors. While companies ranging from Computer Associates to Jones Apparel Group have recently announced their intent to expense options, few carry more weight than GE. The high-profile convert will put additional pressure on other big companies to follow suit. Should investors brace themselves for a fresh spate of corporate-earnings restatements? Maybe, according to a new survey by CFO magazine. A survey of 141 CFOs of large public companies, to be published in the magazine's August issue, found that 17% said their CEOs had pressured them to misrepresent results in the past five years. And 5% succumbed, admitting that they had violated generally accepted accounting principles at least once in the past five years. But the post-Enron backlash may be stiffening financial execs' spines: 59% of the CFOs said they had disclosed more data to investors during the past three months. Local phone giant Qwest Communications (Q) announced that it may have to restate as much as $1.1 billion in revenues dating back to 1999. The changes relate to a number of transactions, including the controversial swapping of fiber-optic network space between carriers. Richard Notebaert, Qwest's new chairman and CEO, withdrew prior management's 2002 earnings projections, raising the possibility that the company might find itself in default when terms of its bank loans tighten later this year. Qwest has confirmed that it is under investigation by the SEC and the Justice Dept. The pain in the energy-trading industry appears to be Warren Buffett's gain. Struggling to boost cash flow and improve its credit rating, energy trader Dynegy (DYN) announced on July 29 that it was selling the prized Northern Natural Gas pipeline to MidAmerican Energy Holdings, a Buffett-controlled concern. MidAmerican will pay $928 million and assume $950 million of debt for Northern. Dynegy acquired the 16,600-mile interstate pipeline for $1.5 billion, plus debt, as part of its failed effort to merge with Enron last year. The deal follows MidAmerican's March buy of another interstate pipeline, Kern River Gas Transmission, from troubled Williams. Initial public offerings will never be the same. On July 28, the National Association of Securities Dealers rolled out new rules designed to force investment banks to fairly allocate IPO shares. Under the guidelines, which still need SEC approval, investment banks can no longer charge investors inflated commissions for shares of an IPO, and they can't shower executives with IPO shares for receiving investment banking work. Another no-no: Bankers will no longer be able to insist that investors prop up the stock of a company by buying its shares after its flotation as a condition for getting a piece of IPO action. -- AOL Time Warner (AOL) confirmed that the Justice Dept. is investigating AOL's accounting.

-- Vanguard, the low-fare airline, filed for bankruptcy and discontinued operations.

-- Guidant (GDT) will pay $3 billion in stock for Cook Group, a maker of drug-coated stents. Shares of Trizec Properties (TRZ) slipped 4.1%, to $13.95, on July 31, after the real estate investment trust reported that funds from operations (FFO) fell 10.3% in the second quarter. The New York City-based REIT blamed lower occupancy rates and higher costs in some key national markets, and cut its forecast of FFO for the year by 9%.

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