REGULATORY

PAIR PLEADS GUILTY IN MUTUAL FUND PROBE

Two executives of Kaplan & Company Securities of Florida have pleaded guilty to state securities fraud charges that stemmed from an investigation of illegal after-hours trading of mutual funds, New York Attorney General Eliot Spitzer said yesterday.

The Securities and Exchange Commission separately announced a $750,000 civil settlement against the brokers, Delano Sta. Ana, 29, and Lawrence Powell, 40. They pleaded to felony securities fraud under New York’s Martin Act and each face one to four years in prison.

Kaplan is based in Boca Raton, Fla., and is a privately held financial services firm. One of its clients was Canary Capital Partners, a hedge fund operator.

The two men are accused of illegal late trading of mutual funds for Kaplan and specific hedge fund clients.

The SEC said the brokers settled an administrative action in connection with their role in a scheme to defraud mutual fund shareholders through late trading. Late trading is illegal and involves favored customers receiving the market-closing price for fund shares for orders placed after the stock market closes for the day at 4 p.m. Eastern time. This allows them to profit on market-moving news that develops overnight and during the next day.

– Associated Press

STATEWIDE

SETTLEMENT REACHED ON EMISSIONS FOR COAL PLANTS

The operators of six New York coal-fired power plants, including two that environmentalists say are the biggest polluters in the state, agreed Tuesday to slash nitrogen oxide and sulfur dioxide emissions.

Governor Pataki and state Attorney General Eliot Spitzer said the reductions will both reduce emissions that cause acid rain and remove some of the pollutants blamed for asthma and other respiratory ailments, especially in children.

Under the settlement of suits filed in 2002, 18,000 tons of nitrogen oxide and 123,000 tons of sulfur dioxide will be removed annually from the emissions of the six plants.

The two chief polluters, the Huntley and Dunkirk power plants in western New York, combined will reduce sulfur dioxide emissions by 87 percent and nitrogen oxide emissions by 81 percent, state officials said.

The owner of Huntley and Dunkirk, NRG Energy Incorporated, will achieve the lower emissions by installing new pollution controls, using cleaner-burning coal and retiring the four oldest generators at the plants, state officials said.

– Associated Press

INTERNATIONAL

E.U., U.S. TO SEEK SETTLEMENT ON BOEING, AIRBUS AID

The European Union and America agreed to seek a settlement on government aid to Airbus SAS and Boeing Company in an attempt to prevent a 10-year-old dispute from becoming the biggest case in the World Trade Organization’s history.

“The objective of these negotiations, which will last three months, is to eliminate different types of subsidies and to establish fair market-based competition between Boeing and Airbus,” EU Trade Commissioner Peter Mandelson told journalists yesterday in Strasbourg, France.

The decision heads off the immediate threat of a court case after America filed a complaint at the WTO on October 6, a month before the presidential election, saying European government loans to Airbus worth $15 billion amount to illegal subsidies under global trade rules. The E.U. countered, saying Boeing has benefited from unfair support worth as much as $23 billion.

– Bloomberg News

FOREIGN

NORTEL OFFICIALS TO REPAY BONUSES AFTER RESTATEMENT

Nortel Networks Corporation said 12 executives will repay $8.6 million in bonuses based on misreported finances after the company restated results for 2001 to 2003.

Nortel, the largest North American phone-equipment maker, said in a statement yesterday that five directors including the chairman, L.R. Wilson, who were on the board for the restated period, will leave the board. It appointed two new directors, nominated a third, and tapped Susan Shepard as chief ethics officer.

The restatement cuts by 41% profit for 2003, the year on which the bonuses were based, and brings the chief executive, William Owens, closer to cleaning up the company’s finances. Sales fell in 2004 from the previous year, and may rise in 2005, Mr. Owens said yesterday on a conference call with analysts.

Nortel’s results disclosure “reduces uncertainty and that’s always good for shares,” said Robert M. Callander, who helps manage the equivalent of about $750 million at Caldwell Securities Ltd. in Toronto. “The company still has lots of challenges ahead.”

– Bloomberg News