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Week in Review

TOP STORIES -- April 27 -- May 2

May 04, 2003|From Times Staff and Wire Services

Wall Street Firms to Pay

$1.4-Billion Settlement

One of the biggest scandals in Wall Street history reached an important watershed when securities regulators announced a sweeping legal settlement that will change the way brokerage firms do business.

The accord, reached with 10 major firms after months of negotiations, calls for the industry to pay $1.4 billion and implement reforms to restore investors' shaken trust in Wall Street.

The deal ends several investigations into whether analysts intentionally skewed advice given to ordinary investors. The probes peeled back the curtain on a host of practices that became commonplace on Wall Street in the late 1990s. They revealed that some analysts, despite personal misgivings, touted stocks to entice companies to hire their firms for fee-rich services such as underwriting securities or giving merger advice.

As is common in such settlements, the firms neither admitted nor denied guilt. However, regulators said their primary goal was to bolster investors' legal cases against the firms.


Steep Cost of Free Music

Hits Four Collegians

Four college students learned that free music downloads can carry a hidden price tag -- in this case, thousands of dollars.

The major record companies had accused the students -- two at Rensselaer Polytechnic Institute in New York, one at Princeton University in New Jersey and one at Michigan Technological University -- of fueling music piracy by running file-sharing networks on campus and offering songs for copying.

The four settled the companies' claims and promised not to violate their copyrights. The students did not admit to committing or aiding piracy, but each agreed to pay $12,000 to $17,500 to the Recording Industry Assn. of America, the labels' trade group.

The settlements mark the first time the record companies have recovered money from individuals in the United States accused of piracy on file-sharing networks.


Nation's Jobless Rate Rises to 6% in April

The U.S. unemployment rate rose to 6% in April as companies slashed jobs for the third straight month -- particularly in manufacturing, airlines and department stores.

Last month's jobless rate was up two-tenths of a percentage point from March, with payrolls falling by 48,000, the Labor Department reported.

In a separate report, the Commerce Department said factory orders rose 2.2% in March, an improvement over the 1% decline registered in February and the largest gain in eight months.

A big fear among economists is that consumers, whose spending accounts for two-thirds of U.S. economic activity, will continue to keep their wallets closed as layoffs continue and hiring remains stagnant.


Apple Chief Launches Online Music Service

Steve Jobs, chief executive of Apple Computer Inc., unveiled the company's online music service, promising to lure customers from unauthorized file-sharing networks with what he called "a major milestone in the evolution of the real digital music age."

Packed with 200,000 downloadable songs available for 99 cents apiece, Apple's iTunes Music Store is the first industry-endorsed service to forgo subscription fees. The service allows users to transfer songs to as many as three computers and an unlimited number of iPod music players. All five major record labels are supplying content to the service, which offers free 30- second samples and purchases with a click of the mouse.

The Music Store is available only to users whose machines run on Mac OS X, Apple's latest operating system, although Jobs promised a Microsoft version by the end of the year.


Fed Chairman Issues a Cautious Outlook

Federal Reserve Chairman Alan Greenspan offered a surprisingly cautious assessment of the U.S. economy, saying that the country is poised to resume strong growth with the end of the Iraq war but warning that there are few signs of a much-needed pickup in business investment and hiring.

A week after President Bush signaled that he would nominate the central banker to a fifth term as Fed chairman, Greenspan sought to offer a kind word about the White House's multibillion-dollar tax cut proposal. But he said he could support the cuts only if they were accompanied by spending cuts of similar size.

Greenspan reiterated his confidence in the nation's economic prospects in his address to the House Financial Services Committee. But he coupled that with caveats. Consumer confidence is recovering with war's end, he noted, but "reports from businesses have not exhibited a similar improvement in tone."


Affidavit Alleges Rap Label's Drug Dealer Ties

Record label Murder Inc. has exploited the notoriety of a convicted drug dealer with a reputation for violence to intimidate industry rivals through threats and extortion, according to a newly unsealed federal affidavit.

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