IN THE COURTS

CSFB’S QUATTRONE ALLOWED TO REMAIN FREE DURING APPEAL

Former Credit Suisse First Boston banker Frank Quattrone may remain free while he appeals his conviction and 18-month sentence for obstructing justice, a federal appeals court said.

The former technology banker was convicted in May of hindering probes into how CSFB allocated shares in initial public stock offerings. The judge at his trial ordered him to surrender to prison authorities by October 28.

Lawyers for Quattrone, 49, told a three-judge panel of the U.S. 2nd Circuit Court of Appeals in Manhattan that he had strong arguments on appeal, including a claim that the trial judge “made it impossible” to present a defense. The appeals court sided with Quattrone, meaning he may remain free at least until the panel addresses the merits of his case.

Quattrone, who was in court watching from the gallery, hugged his lawyers after the judges ruled. He was otherwise silent.

“We remain confident that the conviction will be reversed, and that Frank Quattrone will not have to serve a day in jail,” his lawyers said in a statement after the ruling.

The Bureau of Prisons has ordered Quattrone to serve his sentence at the federal prison camp in Atwater, Calif., defense lawyer Mark Pomerantz said. The facility had 126 inmates as of last week.

– Bloomberg News

BULLETPROOF VEST MANUFACTURER FILES FOR CHAPTER 11 BANKRUPTCY

Second Chance Body Armor Inc. filed for Chapter 11 bankruptcy after being hit with lawsuits in at least nine states, including Connecticut, accusing it of selling defective bulletproof vests to police officers.

One lawsuit blames the company – the nation’s largest manufacturer of soft, concealable body armor for law enforcement – in the shooting death of a California police officer. Another, brought by the state of Utah, led to a $210,000 settlement.

The bankruptcy petition, filed Sunday, puts the lawsuits on hold while Second Chance tries to work its way out of financial trouble.

“The filing will allow Second Chance management to focus on the management of the business so as to continue to serve its law enforcement and military customers,” chief executive Paul Banducci said.

Connecticut Attorney General Richard Blumenthal said yesterday that his office is reviewing the company’s reasons for filing for bankruptcy protection.

– Associated Press

COURT: BASIS FOR AWARD AGAINST TOBACCO COMPANIES FAULTY

New York law does not allow insurers to sue tobacco companies for deceptive practices and recover smoking-related health costs, the state’s top court determined yesterday.

The decision removes the legal basis for a suit brought by Empire Blue Cross and Blue Shield against cigarette manufacturers that resulted in a $17.8 million verdict against the tobacco industry in June 2001 by a federal court jury in Brooklyn. Based on their share of the cigarette market, Philip Morris and R.J. Reynolds faced the largest payments under the verdict, more than $6 million each.

Upon appeal of that verdict, the U.S. Court of Appeals for the Second Circuit asked the state Court of Appeals to decide whether New York law permits a “third-party payor,” like an insurer, to recover money it paid in health care claims related to smoking. The New York Court of Appeals agreed 7-0 that state law does not.

A 1984 consumer protection law that Empire Blue Cross said does permit such suits does not apply to such cases, the court said.

“What is required is that the party actually injured be the one to bring suit,” the court said in a decision written by Judge Carmen Beauchamp Ciparick. “Empire was not directly injured in this sense.”

– Associated Press

ADVERTISING

ONLINE GAMING AD NETWORK LAUNCHED

The $10 billion world of computer gaming has remained largely out of reach to advertisers for anything other than generic branding ads. But yesterday, New York-based technology startup Massive, inc. announced its dynamic advertising network that will allow marketers to customize their campaigns and insert ads using such variables as time of day or season.

The video game industry surpassed Hollywood in gross receipts last year, but advertisements placed in game context were sold as one-time product placements. Just as in movies, they could not be changed once they went in.

Massive’s network allows businesses to change ads within the game world to reflect specials, sales, new locations, or other news.

Massive’s network works similarly to the online marketing services company DoubleClick’s once did, giving marketers the ability to control advertising content across multiple game networks.

Since many games already include billboards or other advertising surfaces, Massive’s said its network is expected to integrate seamlessly. A company press release said the new ads have no effect on game play or speed.

Video game sales are dominated by the much-coveted 18-35-year-old demographic. Massive said in its release that it has signed up dozens of advertisers, and game publishers such as Konami, Universal, and Atari to participate.

– Staff Reporter of the Sun

POLICY

POOLE SEEKS TO RAISE THE AGE FOR SOCIAL SECURITY

Retirement Age America must either raise the eligibility age for Social Security or cut those benefits, rather than place the burden for supporting an aging population on younger workers, said the president of the Federal Reserve Bank of St. Louis, William Poole.

Lower birthrates and a longer life expectancy mean fewer workers will have to support more and healthier retirees for a longer time, said Mr. Poole, who at 67 is already past the official retirement age.

“Unless those in my generation and the baby boom generation want to place a huge tax burden on our children and grandchildren, we need to adopt some combination of the only two possible solutions,” Mr. Poole said in the text of a speech to students at Delta State University in Mississippi. “One is to reduce the annual payments to Social Security beneficiaries, and the other is to reduce the number of retirement years by raising the retirement age. My own preference is to concentrate on raising the retirement age for full benefits.”

Social Security tax receipts equal to 12.4% of a worker’s salary won’t cover the entire cost of outlays starting in 2018, according to the Social Security trustees’ report for 2004.

– Bloomberg News

TELECOMMUNICATIONS

SPRINT 3RD-QUARTER LOSS WIDENS TO $1.91 BILLION ON WRITE-DOWN

Sprint Corp., the no. 3 American long-distance carrier, posted a third-quarter loss after writing down the value of its telephone network. Wireless revenue rose 13%.

The net loss widened to $1.91 billion, or $1.32 a share, from $497 million, or 35 cents, a year earlier, the Overland Park, Kan.-based company said in a statement. Sales rose 3.1% to $6.92 billion.

Falling prices for long-distance calling and increased competition prompted the chief executive, Gary Forsee, to write down the value of Sprint’s landline network by $3.5 billion. Mr. Forsee is relying on wireless to compensate for sagging long-distance revenue as customers shift to cell phones and the Internet. Wireless sales rose to $3.76 billion from $3.34 billion.

The company boosted its full-year revenue forecast to a rise of 4% to 5%, from an earlier estimate of 3% to 4%. Operating income plus depreciation and one-time costs will be at the high end of the company’s forecast of $8.1 billion to $8.2 billion.

– Bloomberg News

PHARMACEUTICALS

MERCK SAYS NEW PAIN RELIEVER GENTLER THAN OLDER PRODUCT

Merck & Co.’s new pain reliever, Arcoxia, was gentler on the stomach than an older pain reliever, the New Jersey drug maker said as it released results of a new study yesterday.

But these days doctors and analysts are more concerned with Arcoxia’s cardiovascular safety profile than its gastrointestinal attributes. That’s because Arcoxia is Merck’s successor drug to Vioxx, which was taken off the market last month after a study showed patients taking it had double the rate of heart attacks and strokes than those taking a dummy pill.

The trial results released yesterday found that there was no statistical difference in adverse cardiovascular events between Arcoxia and diclofenac, the older pain reliever against which it was being compared. However, the average length of time a patient was in the trial was nine months and Vioxx’s dangers didn’t manifest themselves until 18 months into the trial.

Merck is based in Whitehouse Station, N.J. The Food and Drug Administration is slated to rule on whether to approve Arcoxia by October 30, but most analysts and doctors don’t believe the agency will act without longer safety studies.

– Associated Press