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New World, Reliant and KeySpan in SEC Probe

April 06, 2002|From Times Staff and Wire Reports

New World Restaurant Group Inc., Reliant Resources Inc. and KeySpan Corp. are being investigated by the Securities and Exchange Commission, it was disclosed Friday, and the agency brought charges against a mutual fund director for allegedly defrauding investors.

The probes are the latest by the SEC since the collapse of Enron Corp. Most have focused on accounting concerns such as misreported earnings and hidden debt.

New World, operator of Noah's New York Bagels and Einstein Bros. stores and franchiser of Manhattan Bagel and Chesapeake Bagel Bakery stores, said the SEC began an informal investigation into the firing this week of the company's chief financial officer, the resignation of its chairman and a delay in filing its annual report.

New Jersey-based New World said it is cooperating with the investigation.

New World's shares were delisted by the Nasdaq Stock Market in November, which cited shareholder violations and public interest concerns. Its shares were placed on the OTC's Bulletin Board in January. New World's shares fell 5 cents to 37 cents Friday. They have dropped 70% in the last year.

KeySpan, the Northeast's largest natural gas distributor, disclosed in a regulatory filing that company executives are being investigated by the SEC for trades they made before Key- Span disclosed accounting mistakes and a $30-million earnings reduction last July.

The SEC is reviewing trades by officials such as Chief Financial Officer Gerald Luterman, according to a proxy filed by a KeySpan unit. Investigators also are reviewing KeySpan's compliance with reporting rules after buying a contracting business in 2000. KeySpan said it is cooperating with the SEC.

KeySpan shares fell 83 cents Friday to $36.27 on the New York Stock Exchange.

Reliant Resources said it is being investigated by the SEC in connection with the company's restatement of earnings for the second and third quarters last year. The company said it will cooperate fully in the informal inquiry.

Reliant Resources, 82% owned by Reliant Energy Inc., restated second- and third-quarter results, adding $134 million to net income from January to September, the company said. The news was released after the market closed.

Dreyfus Corp. mutual fund director Martin Fife was charged by the SEC with participating in a $52-million fraud in which investors were promised unrealistically high returns on Treasury bills. Fife couldn't be reached for comment.

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