The heat is on former technology banking czar Frank Quattrone. On Mar. 4, Quattrone resigned from Credit Suisse First Boston (CSR) after refusing to cooperate with a NASD probe. The NASD wants to know why Quattrone told bankers to "clean up" files in 2000 after being informed that he was under federal investigation. CSFB said it was in the "best interests" of Quattrone and the bank for him to leave. Quattrone says he followed CSFB policies. He has hired several lawyers, including John Keker, who prosecuted Oliver North.
Quattrone will need the help. New York Attorney General Eliot Spitzer and U.S. Attorney James Comey of the Southern District of New York are expected to soon wrap up obstruction-of-justice investigations, which could mean criminal charges. And the NASD may bar Quattrone from the securities industry.
Sources say Spitzer's office is also talking to Silicon Valley venture capitalists, tech execs, and other "friends of Frank" to see whether CSFB acted improperly in its initial-public-offering practices. Prompted by a sharp decline in the price of media assets, moguls are circling such diverse properties as Vivendi Universal's (V
)Hollywood studio, the DirecTV (GMH) satellite service, and the QVC shopping channel. QVC was put in play when John Malone's Liberty Media (L) triggered a provision to force QVC majority owner Comcast (CMCSK) to either buy Liberty's 42% stake or sell its own 57% interest in the cable channel to Liberty. Malone may use the $5 billion he could get for selling his QVC stake to bid for General Motors' DirecTV against Rupert Murdoch's News Corp. (NWS) Malone is also mulling selling Liberty's 4% stake in AOL Time Warner (AOL). Meanwhile, Vivendi's Hollywood assets are drawing a crowd, with Viacom (VIA)interested in buying Vivendi's USA, Sci-Fi, and Trio cable channels while billionaire Marvin Davis is pressing a $15 billion bid for majority control of the entire unit, which includes the movie and music operations. USA Interactive (USAI) Chairman and CEO Barry Diller is also considered a potential buyer for some Vivendi assets. GlaxoSmithKline (GSK) suffered a setback on Mar. 4 when a Chicago court cleared the way for the launch of a generic version of the company's Paxil antidepressant as early as September. The court ruled that Apotex Group of Canada's generic version of Paxil does not infringe on GSK's patents. GSK plans to appeal. With 2002 U.S. sales of $3.7 billion, Paxil is one of the company's top-selling drugs. Analysts say the launch of a generic version this year could shave one-third off of Paxil's U.S. sales in 2004. GSK has also filed other patent-infringement suits in U.S. courts in the hopes of delaying generic competition. Mindful of his predecessor's mistakes, new Securities & Exchange Commission Chairman William Donaldson has outlined a thorough method for selecting the head of the new accounting oversight board. On Mar. 4, the SEC said it will solicit candidates widely for 10 days. The five SEC commissioners will then winnow the list and interview the top contenders. Former SEC Chairman Harvey Pitt announced he was leaving on Election Day, 2002, after bungling the appointment of former CIA director William Webster to chair the board. Webster resigned amid disclosure that he headed the audit committee of a virtually insolvent company. CEO Mark Hansen was ousted from the top job at troubled Fleming Cos. (FLM) on Mar. 4, a week after the SEC upgraded an informal inquiry into the grocery wholesaler's accounting and trade practices to a formal investigation. Fleming is also facing shareholder lawsuits and the loss of its biggest customer, Kmart (KM), which accounted for about 20% of revenues. Hansen had been criticized for taking Fleming's retail stores into the low-price food business dominated by Wal-Mart Stores (WMT). The company named board member Peter Willmott interim CEO. Insider-trading allegations are taking a toll on Martha Stewart's business. On Mar. 4, Martha Stewart Living Omnimedia (MSO) said it lost $2 million in the fourth quarter, vs. year-earlier net income of $5.7 million, largely because of restructuring charges to trim its catalog and Internet operations. But the company has also seen a drop in ad sales, TV revenues, and newsstand sales of Martha Stewart Living magazine. Investors knocked the stock down 4%, to 7.25. Stewart said that she is "increasingly hopeful that my personal legal situation will be resolved in the near future." -- Schering-Plough (SGP) reduced its 2003 estimates, citing the loss of Claritin prescription sales.
-- The FTC moved to block a $2.8 billion merger between Nestl? (NSRGY) and Dreyer's (DRYR).
-- Defense contractor Northrop Grumman (NOC) lowered its 2003 forecast. With storm clouds gathering over the auto industry, investors hammered shares of Dearborn (Mich.) auto-parts maker Visteon (VC). On Mar. 4, Visteon shares fell 8%, to $5.78, on fears that the Big Three will keep losing domestic market share. A Ford (F) spin-off, Visteon still relies on the No. 2 auto maker for roughly 80% of its $18 billion in sales.