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Program: Monday, November 17, 2003
11/17/03: Morgan Stanley Pays The Highest Price For Impropriety So Far
SUSIE GHARIB: Another black eye for the brokerage business. Morgan Stanley agreed today to pay $50 million to settle charges of improper sales practices. The Securities and Exchange Commission charged that Morgan Stanley brokers were paid extra bonuses and commissions for steering customers to put their money in preferred mutual fund companies. This settlement is harshest fine so far against a company implicated in the unfolding mutual fund industry scandal. Stephanie Woods reports. STEPHANIE WOODS, NIGHTLY BUSINESS REPORT CORRESPONDENT: Regulators say investors paid the price for Morgan Stanley's special partners program. Under that program, Morgan Stanley pushed 16 mutual fund families in exchange for millions of dollars in undisclosed commissions. STEPHEN CUTLER, ENFORCEMENT DIRECTOR, SEC: Under the partners program, every time Morgan Stanley sold its customers shares of funds in the club, the fund family was obligated to pay Morgan Stanley a percentage of the sales price over and above ordinary commissions and loads. But customers didn't know about these special shelf space payments. WOODS: As part of the settlement, Morgan Stanley agreed to give clients more information about its mutual fund sales practices, and hire an independent consultant to review its policies. In a statement, Morgan Stanley's CEO, Philip Purcell, said he regrets that some of its sales and disclosure practices have been found inadequate. He also promised to "demonstrate to clients and regulators alike that Morgan Stanley is prepared to walk the walk, not just talk the talk." The SEC is now examining the mutual fund sales practices of 15 other brokers. Mutual fund companies are also in regulator sights over hidden fees. CUTLER: A lot of mutual fund prospectuses include generalized disclosure about the payments of fees to underwriters and distributors, and the payments of commission dollars to those who were otherwise distributing their funds. And the law in this area, I would say, is a little bit murky, but we think that the conduct here clearly crossed the line. WOODS: Congress is considering new laws to require mutual fund companies to disclose more information about fees. But many observers say lawmakers need to do more to protect investors. GARY GENSLER, FORMER TREASURY UNDERSECRETARY: The inherent conflicts of interest between the broker who is pushing something on you because they get an extra bonus for Christmastime, that is what has to be addressed, these conflicts of interest. WOODS: Tomorrow, SEC Chairman William Donaldson will give lawmakers his recommendations for increasing oversight of the industry. On December 3, the commission plans to take up new rules to beef up disclosure, and crack down on market timing and late trading. Stephanie Woods, NIGHTLY BUSINESS REPORT, Washington.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
SUSIE GHARIB: An important vote coming up tomorrow here at the New York Stock Exchange: members of the big board will cast ballots on a new governance plan that was crafted by interim Chairman John Reed. Joining us now to talk more about this, Muriel Siebert, the first woman to hold a seat on the NYSE, and chairwoman of the brokerage firm that bears her name. Hi, Mickey, nice to have you on the program. MURIEL SIEBERT, PRES. & CHAIRWOMAN, MURIEL SIEBERT & CO.: It's good to be here, Susie. GHARIB: Let me start off by asking you how you feel about John Reed's plan and the reforms that he's proposing for the New York Stock Exchange. SIEBERT: I think it's a good first step forward. He's proposing to separate the two into tot! ally independent board of directors and then a board of executives, as an adviser. GHARIB: Do you - how do you feel about the criticism that this plan doesn't go far enough and that the New York Stock Exchange really has to separate out the regulatory part of its operation? SIEBERT: He has done what I think is more than adequate. There's going to be an independent officer; that is, somebody who will have no other functions except be in charge of regulation, and that person will report to the board of governors who will be non-industry people. So I think that's a very good first step. GHARIB: Now, that sounds good on paper, but do you think, in practice, that this chief regulatory officer really will be able to operate separate from the NYSE management? SIEBERT: I believe so. The regulatory function is a very important one, and if they are determined, they can do it very, very honestly and very neatly and very cleanly. GHARIB: You know that! this is a big, you know, criticism about this regulation. Do you thin k that over time that ultimately the NYSE is going to be forced to separate its regulatory operations from its market operations, is it just a matter of time? SIEBERT: Well, it doesn't have to be. You could have the regulatory function report to the SEC also. We do have our own examiners. The examiners are very good. And the reporting, at least they will not report to anyone who can influence their pay, and that's important to me. GHARIB: Well, that was an - influencing pay, that was one of the big issues that came up with the, you know, ultimate resignation of the former chairman and CEO, Dick Grasso. Do you think that these reforms go far enough to avoid those kinds of conflicts of interest? SIEBERT: I think that this is a change in the constitution of the New York Stock Exchange. It is a wonderful first step forward. The directors that they're going to be voting on will only hold office until June of 2004, so they're really interim directors to get it! started. And they can add or change the constitution at a later date when they see how it works, what happens to the specialists, and when they see what happens to the rest of the exchange. GHARIB: So what's the second step, you said that's the first step? SIEBERT: The first step is tomorrow they will vote for the new constitution, and they will vote for up to eight of the directors that have been recommended, who will serve until June of 2004. GHARIB: What do you think is going to be the outcome of that vote? SIEBERT: I think everybody has to vote for it. They have no options. GHARIB: Why is that? SIEBERT: Well, if they don't vote for it, we're going to just continue to have more changes, but at what time period? And then the SEC could step in if the members don't vote for it. About half of the members work for a member firm. They can own their own seats, but they work on there. Over 500 are retired, and they're counting on the lease rentals for a good piece of their income. GHARIB: OK. Let m e ask you real quickly, we just have 30 seconds left, the specialist system, what are your thoughts on that? John Reed has, you know, worked hard to keep the specialist system intact. There's a lot of criticism about the conflicts in the system and kind of out-of-date. What is your view on the specialist system? SIEBERT: I think they're going to have to put in some new rules for the specialist system, but the specialist system does do a job. It's been there for a long time, and they can put in rules that they have not had or enforced recently. GHARIB: All right, Mickey, it's great to hear from you on this important subject. Thank you very much. We've been speaking with Muriel Siebert, chairwoman of Muriel Siebert & Company.
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
11/17/03: Mukul Pandya Editor of Knowledge@Wharton: Successful Business Leaders
SUSIE GHARIB: NIGHTLY BUSINESS REPORT will soon mark its twenty-fifth year on public television, and to celebrate that distinction, we have joined with the Wharton School of the University of Pennsylvania to select the most influential business persons of the past 25 years. Our viewers submitted over 700 nominations. Now a panel of Wharton judges will make the final selection, which we will announce early next year. Joining us now to talk about leaders who have affected political and social change: Mukul Pandya, editor of Knowledge@Wharton, it's the school's online business journal. Mukul, nice to have you on the program. MUKUL PANDYA, EDITOR & DIRECTOR, KNOWLEDGE@WHARTON: Thank you for having me, Susie. GHARIB: Let me begin by asking you this, in terms of just the criteria for business leaders that qualify: usually when people think of successful business leaders, they think of someone who's built a very big business or who's made a lot of money. They don't think of leaders who have contributed to social and political, you know, changes. So what is the criteria for this category of leadership? PANDYA: Well, that's a very interesting question, Susie. And the point that we were trying to make in using this criterion is that, like you said, people usually think of business success in terms of business leaders who have made the most money or who have struck the biggest deals. But that's really not all, because the most successful business people typically are motivated not just by a big deal or making the most money, but have a much broader social vision. And they are inspired by a vision that drives them to improve the human condition, rather than just make the most lucrative deals. That's the idea we were driving at. GHARIB: So are you saying that these individuals are not interested in profits and things like that, that drive many other business leaders? PANDYA: No, that's not quite what I was trying to say. They are indeed interested in profits and revenues. But I think what sets such business leaders apart is the attitude that they have towards profits and revenues. For them, the profits and revenues are not the end, they are not the sole motivation. They often, these leaders, tend to think of profits as the means and the end is a much broader social vision that aims at improving the human social condition. For example, one often thinks of Bill Gates in the context of Microsoft and Windows. But equally important, and even more so in this context is the kind of work that the Bill & Melinda Gates Foundation has been doing in basic services like health care and education. And while people like Bill Gates and George Soros are pretty well known for their work in this area, there are other people in other parts of the world who have been also very influential and who perhaps are not as well known. GHARIB: OK. When you single out people for doing good, are there some social causes that are more important than others? PANDYA: I would say that, that that's definitely the case. I mean, if you think about poverty, that across the board seems to be the single most issue because if you solve that problem, it just tends to tackle things like health care, education, other things sort of seem to follow to some extent from that. And there are innovations that have been made in the last 25 years in areas such as micro-lending, for instance, that have helped bring about quite a bit of change. But equally important, I would think, are initiates that aim at education and health care. GHARIB: OK, I'm sure we could talk on this for a long time, but we've run out of time for now. Thank you very much. PANDYA: Thanks a lot. Thank you for having me, Susie GHARIB: We've been speaking with Mukul Pandya of the Wharton School. KANGAS: Tomorrow, the challenge for America's classrooms: "Letting Teachers Teach."
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
11/17/03:
Commentary: The Steel Tariff Leaves Many Bent Out Of Shape SUSIE GHARIB: In tonight's commentary: the Bush administration and its tariff on steel imports. Here's James Bradford DeLong, professor of economics at the University of California at Berkeley. JAMES BRADFORD DELONG, COMMENTARY: Of all the very odd things this George W. Bush administration has done in the field of economic policy, perhaps the oddest of all is its steel tariff. As George W. Bush's economic advisers told him two years ago, have told him many times since, and are telling him today, tariffs on steel imports give every steel-using American industry's foreign competitors a powerful cost advantage. The steel tariff has surely cost America more manufacturing jobs than it has saved. It is not only bad economics, it is bad mercantilism as well. Now the World Trade Organization has said the obvious, that this tariff is a violation of our treaty obligations. And so the Bush administration has a chance to back down. Moreover, it has a chance to save face as it backs down by blaming the WTO and Bill Clinton, who got us into the WTO, for its own failure to fulfill campaign promises made to America's steelworkers. But consider, nobody is happy with Bush administration trade policy, especially not those who hoped moves toward freer trade would strengthen the American economy. But isn't it very likely that Bush administration trade policy would have been even worse for America in the absence of the system of rules and obligations that is the World Trade Organization? I'm Brad DeLong. Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
11/17/03: "Paul Kangas' Stocks In The News"
PAUL KANGAS: Wall Street opened in a broad retreat on bad news on everything from those expanding mutual fund investigations to concerns about more terrorist attacks. Tokyo's NIKKEI stock index tumbled almost 4 percent overnight after al Qaeda threatened an attack in Japan if it sent troops to Iraq. After an hour of trading, the Dow was down 80 points, the NASDAQ Index fell 26. The market continued to fall on weakness in technology, financial, drug, retail, oil services, and even gold stocks. By early afternoon, the Dow was off 132 points, the NASDAQ down 40. That sharp sell-off gradually attracted buyers for the rest of the day. So the Dow Industrial Average cut its closing loss to 57.85 points at 9710.83. The NASDAQ Composite fell 20.65, ending at 1909.61. Standard & Poor's 500 Index lost 6.72 to 1043.63. Over in the bond market, the 10-year note edged up 6/32 to par and 14/32, pushing the yield down to 4.20 percent. Two of the big names in the insurance industry are joining forces to get eeven bigger. St. Paul Companies (NYSE:SPC) is buying larger rival Travelers Property Casualty (NYSE:TAP) in an all-stock deal that creates the second largest property and casualty insurer in the United States. Travelers shareholders will get 0.43 ST. Paul shares for each of their shares, valuing the deal at about $16 billion, based on Friday's closing price. There's no premium for Travelers, but analysts say that's not necessarily bad. The most active New York Exchange issue, trading 37.5 million shares, was Lucent Technologies (NYSE:LU), losing $0.11. Followed by General Electric (NYSE:GE), a $0.07 loss there. Agere Systems (NYSE:AGR.A) down $0.23. Corning (NYSE:GLW) lost $0.49. Corning said it sees first-quarter earnings coming in around $0.02 to $0.04 a share. That's before special items. Pfizer (NYSE:PFE), fifth in volume, dropped a penny a share. Then NorTel Networks (NYSE:NT) losing $0.09. The company's chief executive does not expect capital expenditures by the big telecom companies to return to the high levels of the late 1990s. Texas Instruments (NYSE:TXN) fell $0.49. Sprint PCS Group (NYSE:PCS) down a nickel. AT&T Wireless (NYSE:AWE) fell $0.18. And Travelers Property Casualty (NYSE:TAP) showed no change. You heard about the deal, the stock deal with St. Paul (NYSE:SPC). Today that's worth $16.35 a share to Travelers shareholders because St. Paul moved up $0.97 to $37.74. DuPont (NYSE:DD), another member of the Dow Industrial Average, down $0.46. The company is going to sell Invista, that's its textile and interiors unit, to Koch Industries. The price, $4.4 billion in cold hard cash. Lowe's Companies (NYSE:LOW) down $0.72 even though the company out with third-quarter earnings, $0.56 up from $0.43 last year, $0.03 above the Street estimate. But what hurt the stock is the company said fourth-quarter earnings will be no better than the $0.49 Wall Street estimate. That may have undermined Home Depot's (NYSE:HD) stock, which fell $0.72, because its earnings are due out tomorrow. The estimate is $0.46 a share. American Express (NYSE:AXP), still another Dow stock, losing $1.40, the biggest loser in the Dow Industrials today. Friday t he company said regulators have contacted its financial advisers unit about its mutual fund trading practices. Also today the company said its issuing $1.8 billion in convertible securities. Potential earnings dilution there. Wyeth (NYSE:WYE), the big pharmaceutical, down $1.04. Merrill Lynch downgraded it from buy to neutral on concerns over litigation regarding the company's diet product called Fen-Phen. Toys "R" Us (NYSE:TOY) fell $1.56. And the third-quarter was a loss of $0.18, bigger than last year's $0.13 loss. The company cut its full-year earnings estimate. Also it said its closing its Kids "R" Us stores and Imaginarium stores. Another big loser, Shurgard Storage Centers (NYSE:SHU), which is actually a real estate investment trust. And because of inconsistent information from management, Deloitte & Touche is resigning as the outside auditor for the company. Smith Barney downgraded it from buy to sell on the stock. Standard & Poor's repeated an avoid recommendation. Finally a gainer, Hollinger International (NYSE:HLR) rising $2.23. The newspaper company's chief executive officer, Lord Conrad Black, and chief operating officer, David Radler, are stepping down following discovery of $32 million of unauthorized payments to Black and other top executives. However the company did retain Lazard to review alternatives, including the possible sale of the company. That's what boosted the stock no doubt. Medco (NYSE:MHS), the recent spin-off from Merck (NYSE:MRK), down $1.55 after Wachovia Securities downgraded it from outperform to market perform on a valuation basis. NASDAQ's most active, Microsoft (NASDAQ:MSFT), down $0.35. Followed by Intel (NASDAQ:INTC), a $0.57 loss there. Yahoo! (NASDAQ:YHOO) off $1.27. Applied Materials (NASDAQ:AMAT) managed to gain $0.26. But Career Education (NASDAQ:CECO) plunging $7.10. A former director of career services at the company's Gibbs College is suing the corporation for wrongful termination because she would no t falsify student records. Cisco Systems (NASDAQ:CSCO) down $0.21. Amgen (NASDAQ:AMGN) managed to gain $1.69. But Amazon.com (NASDAQ:AMZN) losing just over $2. Dell Incorporated (NASDAQ:DELL) down $0.35. SINA Corp. (NASDAQ:SINA) off $3.05, tenth in volume. Silicon Image (NASDAQ:SIMG) down $2.45 a share. The company is delaying release of its third-quarter results due to questions about licensing revenues. And another major loser, PC Connection (NASDAQ:PCCC), tumbling $2.20. The General Services Administration, GSA, has cancelled a key government management systems contract due to incorrect procedures by the company. In this year's first nine months, that contractor accounted for about 5 percent of the company's profits. And those are the "Stocks in the News."
Nightly Business Report transcripts are available on-line post broadcast. The program is transcribed by eMediaMillWorks. Updates may be posted at a later date. The views of our guests and commentators are their own and do not necessarily represent the views of Community Television Foundation of South Florida, Inc. Nightly Business Report, or WPBT. Information presented on Nightly Business Report is not and should not be considered as investment advice. Copyright (c) 2003 Community Television Foundation of South Florida, Inc. ALL RIGHTS RESERVED. Terms of use.
NET PERCENT
CLOSE CHANGE CHANGE
DOW CLOSE 9710.83 -57.85 - .6
HIGH 9765.64
LOW 9629.87
NASDAQ COMP. 1909.61 -20.65 -1.1
HIGH 1919.23
LOW 1890.72
VOLUME 1,335.8
PREVIOUS 1,338.8
UP VOLUME 236.0
DOWN VOLUME 1,061.6
DOW TRANSPORTS 2893.13 -34.51 - 1.2
DOW UTILITIES 246.34 -2.32 - .9
CLOSING TICK +547
S&P 500 1043.63 -6.72 - .6
S&P 100 516.23 -2.78 - .5
MIDCAP 400 552.80 -4.37 - .8
REUTERS/CRB 253.57 -3.72 - 1.5
NYSE COMPOSITE 5963.35 -47.38 - .8
VALUE LINE 340.96 -3.65 -1.06
RUSSELL 2000 526.21 -6.75 -1.27
WILSHIRE 5000 10172.42 -72.24 -0.71
U.S. TREASURIES
5-YEAR NOTE 3.375%
Nov. 15,2008 100 31/32 +4/32 3.16
10-YEAR NOTE 4.25%
Nov. 15,2013 100 14/32 +6/32 4.20
30-YEAR NOTE 5.375%
Feb. 15, 2031 104 25/32 +3/32 5.05
LEHMAN BROS.
LONG BOND INDEX 1739.02 +14.41
DOW CLOSE 9710.83 -57.85 - .6
ADVANCES 976
DECLINES 2276
NEW HIGHS 87
NEW LOWS 14
NET PERCENT
NYSE MOST ACTIVES 4PM CLOSE CHANGE CHANGE
LU Lucent Tech 3.00 -.11 -3.5
GE GE 27.81 -.07 -.3
AGRa Agere Systems 3.24 -.23 -6.6
GLW Corning 11.10 -.49 -4.2
PFE Pfizer 34.07 -.01 -.0
NT Nortel Networks 4.05 -.09 -2.2
TXN Texas Instrument 28.34 -.49 -1.7
PCS Sprint PCS Group 4.20 -.05 -1.2
AWE AT&T Wireless 6.63 -.18 -2.6
TAPa Travelers Prop 16.03 unch. unch.
NASDAQ CLOSE 1909.61 - 20.65 - 1.1
VOLUME 1,869.1
PREVIOUS 1,832.6
ADVANCES 994
DECLINES 2202
NASDAQ ACTIVES
MSFT Microsoft 25.15 -.35 -1.4
INTC Intel 32.23 -.57 -1.7
YHOO Yahoo! 40.36 -1.27 -3.1
AMAT Applied Matl 23.74 +.26 +1.1
CECO Career Education 45.81 -7.10 -13.4
CSCO Cisco Systems 22.05 -.21 -.9
AMGN Amgen 59.94 +1.69 +2.9
AMZN Amazon.com 50.36 -2.09 -4.0
DELL Dell Inc 34.89 -.35 -1.0
SINA Sina Corp 31.38 -3.05 -8.9
AMEX CLOSE 1071.48 - 1.69 - .2
INDEX SHARES
DIA DIAMONDS TRUST 97.47 -.50 -.5
QQQ NASDAQ 100 34.68 -.33 -.9
SPY S&P DEP.RECEIPTS 104.93 -.53 -.5
STOCKS IN THE NEWS
DD Du Pont Co 39.73 -.46 -1.1
LOW Lowes Companies 57.91 -.72 -1.2
HD Home Depot 35.47 -.72 -2.0
AXP American Express 43.93 -1.40 -3.1
WYE Wyeth 40.11 -1.04 -2.5
TOY Toys "R" Us 11.18 -1.56 -12.2
SHU Shurgard Storage 36.10 -2.75 -7.1
HLR Hollinger Intl 15.73 +2.23 +16.5
MHS Medco Health 34.65 -1.55 -4.3
SIMG Silicon Image 6.40 -2.45 -27.7
PCCC PC Connection 7.10 -2.20 -23.7
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