NATIONAL

US AIRWAYS SHARES DIP AFTER PILOTS TURN DOWN CONTRACT PROPOSAL

US Airways Group Inc. shares dropped as much as 18% early Tuesday after the leaders of the pilots union refused to put the company’s latest contract proposal to a vote among union members.

The shares ended the day down 30 cents, or 12.77%.

In a press release late Monday, the Air Line Pilots Association union said its leadership, called the Master Executive Council, voted down a proposal to put the latest contract to a vote when three representatives from Philadelphia and Pittsburgh voted nay.

US Airways Chief Executive Bruce Lakefield has said he must arrange cheaper contracts with employee groups by the end of the third quarter in order to remain out of bankruptcy court. The airline has debt and lease payments due this month that could drain cash needed to keep the airline operating. The pilots are the first of five unions to begin contract negotiations this time around.

“We are profoundly disappointed that the actions of a few prevent our pilots from making their own decisions. Nevertheless, we remain firmly committed to reaching an agreement that is responsive to our pilot’s needs, but also meets our required financial target,” US Airways said in a statement.

– Dow Jones Newswire

REGULATORY AMVESCAP’S INVESCO, AIM AGREE TO $450 MILLION FUND SETTLEMENT

Amvescap Plc’s U.S. mutual-fund units, Invesco Funds Group and AIM Investments, reached a $450 million settlement with federal and state complaints of improper trading.

Invesco, based in Denver, will pay $215 million in damages and a penalty of $110 million, while Houston-based AIM will pay $50 million in damages and penalties, according to a statement by New York Attorney General Eliot Spitzer. The companies also will reduce fees charged to mutual fund investors by $75 million over the next five years, Mr. Spitzer’s office said.

The settlement is the third-largest extracted from mutual fund companies in the year-old probe of trading improprieties in the $7.4 trillion industry. Invesco and AIM’s penalties will bring the total imposed on the industry to more than $2.9 billion.

“This sends the strongest message yet that mutual fund companies will be held accountable for behavior that harms consumers and average shareholders,” Colorado Attorney General Ken Salazar, one of the regulators in the settlement, said in a statement.

Invesco permitted select investors, including the Canary Capital Partners LLC hedge fund, to make improper trades between 2001 and 2003 worth $58 billion, regulators said. The company, which four years ago managed $45 billion and now oversees about a third of that amount, has been reorganized and merged into AIM.

– Bloomberg News

IN THE COURTS

QUATTRONE MAY FACE 21-MONTH SENTENCE

Frank Quattrone, who earned $120 million in 2000 as Credit Suisse First Boston’s top investment banker for technology companies, may receive 21 months in prison, five months more than U.S. sentencing guidelines recommend, a person familiar with the situation said.

Quattrone, 48, faces 10 months to 16 months in prison for impeding investigations of how his bank allocated stock during the technology boom of the late 1990s. Prosecutors asked U.S. District Judge Richard Owen to increase the banker’s sentence by five months because Quattrone allegedly lied at his obstruction of justice trial, the person said. Prosecutors haven’t said publicly how Quattrone may have lied. The government’s stance on Quattrone’s sentencing, scheduled for this morning in federal court in New York, reflects a crackdown by federal prosecutors on white-collar crime in the financial-services industry. Quattrone is the highest-ranking banker to face prison since junk-bond pioneer Michael Milken in 1991.

Robert Chlopak, a spokesman for Quattrone, and Megan Gaffney, a spokeswoman for interim U.S. Attorney David Kelley, declined to comment.

Quattrone, the son of a South Philadelphia pants presser, oversaw a Palo Alto, Calif.-based technology banking group that generated as much as 15% of CSFB’s revenue during the Internet boom.

– Bloomberg News