Business briefs for July 15, 2004

Thursday, July 15, 2004 | 10:44 a.m.

Wholesale prices, industrial production fall in June

WASHINGTON -- Wholesale prices fell by 0.3 percent in June and big industry production was down as well, unexpected developments that one analyst likened to the economy hitting a speed bump.

A retreat in food and energy costs caused the drop in the Producer Price Index, the biggest in a year, the Labor Department reported today. That came after wholesale costs shot up in the prior two months, reflecting sharply higher prices for energy and food. Wholesale prices had risen by 0.7 percent in April and by 0.8 percent in May.

Separately, the Federal Reserve reported today that industrial production at the nation's factories, mines and utilities dropped 0.3 percent in June, it marked the largest decline since April 2003. That followed a 0.9 percent advance in May.

SEC requests information in bond market inquiry

Bank of America Corp., the third-biggest U.S. bank, received a request for information from the Securities and Exchange Commission over its dealings in the $204 billion auction-rate bond market.

The request is about "practices in the auction-rate market," Bank of America spokeswoman Shirley Norton said in an e-mailed statement. She said the bank is cooperating fully and declined to comment further, citing a policy at the Charlotte, N.C.-based company against discussing "open regulatory inquiries."

The SEC is probing whether brokers who help set yields for auction-rate bonds misled investors and issuers.

Pension plans may be cut

CHICAGO -- United Airlines said Wednesday that it would put off making $72.4 million in payments to its employee pension funds, a move that experts said signaled that the airline was likely to seek deep cuts in one or more of its retirement plans.

The action, disclosed in a filing with the Securities and Exchange Commission, was the first significant step taken by the bankrupt airline since its application for federal loan guarantees was rejected at the end of June.

Though United -- a subsidiary of UAL -- has been in Chapter 11 bankruptcy since December 2002, it has been operating normally; until now it has made good on all its mandatory pension contributions, even as it negotiated other wage and benefit cuts from its unions.

Cable provider looks for bids

GREENWOOD VILLAGE, Colo. -- The Adelphia Communications Corp., the country's fifth-largest cable provider, has chosen UBS Investment Bank and Allen & Co. to be financial advisers as it prepares to accept bids to sell itself.

Potential suitors include Comcast and Time Warner Cable. Adelphia is also making plans to emerge from bankruptcy protection, where it has operated for the last two years.

On July 1 Adelphia, which is based in Greenwood Village, Colo., won court approval for $8.8 billion in financing for its exit from bankruptcy.

While creditors are pushing for a sale, Adelphia may leave bankruptcy and continue operating until its value rises.

The appointment of UBS Investment Bank, Allen & Co. and the law firm of Sullivan & Cromwell is subject to approval by the U.S. Bankruptcy Court in Manhattan.

Current, former workers acquitted

BOSTON -- Jurors acquitted eight current and former employees of TAP Pharmaceutical Products on Wednesday of charges they offered doctors improper consulting fees, dinners, golf trips and other kickbacks to get them to prescribe certain drugs.

The federal jury deliberated for parts of four days following a three-month trial.

The case had been closely watched by the drug industry and the medical profession, which have been criticized in recent years for giving and receiving freebies. Critics say the practice drives up the already high costs of prescription drugs and erodes public confidence that doctors are prescribing the right medicines.

SEC boosts regulations

WASHINGTON -- Federal regulators on Wednesday proposed new oversight for hedge funds, investment pools traditionally for the wealthy that are growing and attracting small investors but have scant federal scrutiny.

The vote was 3-2, marking the second time in less than a month the Securities and Exchange Commission split over a significant regulatory move. In both instances, SEC Chairman William Donaldson and the two Democratic commissioners opted for stricter regulation while the two other Republican members opposed it.

On June 23 the panel voted in the same fashion to mandate that mutual fund boards have chairmen who are independent from the companies managing the funds.