VideoInvestigators at the Securities and Exchange Commission are probing stock purchases made by First Union and Wachovia, the financial-services companies that merged two years ago.
According to Wachovia's management, the commission is looking into the common-stock transactions made by the two companies from 1996 to 2001, "with a particular focus on purchases following the April 2001 merger announcement."
Apparently the SEC investigators want to know if the two financial-services heavyweights tried to manipulate the market by buying company stock to artificially boost their share prices, according to a Wall Street Journal story citing sources familiar with the matter.
Current executives of the financial-services company (which kept the name Wachovia after the merger) believe shares repurchased by means of forward purchase contracts between 1996 and 2001 "are within the scope of the SEC's inquiry."
In forward purchase transactions, a buyer purchases shares in the market over time and agrees to sell an equal number of shares to a counterparty.
As you may recall, during the 2001 merger talks between Wachovia and First Union, SunTrust Banks made an unexpected hostile bid for Wachovia. At first the SunTrust bid was reportedly 17 percent higher than the friendly offer from First Union. But SunTrust's hostile bid fell below the friendly bid after First Union's stock price rose 13 percent.
Following the defeat of the SunTrust bid, Robert McCoy, then Wachovia's CFO, confirmed that Wachovia had acquired First Union shares, according to the Journal story.
Wachovia executives said they believe that all purchases by the legacy companies complied with the law and were made according to the advice of leading U.S. securities lawyers. The company's management indicated it is cooperating fully with the SEC. It also indicated that the commission has not accused First Union or Wachovia—or the employees of the companies—of wrongdoing.
Remembrance of Andersen Audits Past
You thought you've heard the last of Arthur Andersen LLP?
Apparently not. The ghost of the defunct accounting giant seems to have a way of haunting the attic of old audits.
Take the case of Miller Industries. Management at the towing-equipment maker have asked the SEC for a 15-day extension in filing the company's annual report. The filing, it seems, has been gummed up by prior Anderson audits.
The snarl-up began when Miller executives had to restate prior-year financial statements to reflect the discontinuation of certain operations in 2002. Because Andersen had been the auditor in those prior years, PricewaterhouseCoopers, Miller's current independent auditor, has to reaudit the financial records from periods before the annual report can be filed.
But where are the work papers for those years? "The reaudits have been hampered by the inability to secure in a timely manner any of the work papers generated in connection with those prior-year audits by Arthur Andersen LLP," said Miller management.
Nevertheless, the company's management says it intends to finish the audits, distribute a press release reporting the 2002 financial results, and file the 10-K as soon as possible.
HR Execs Upbeat on Hiring
People. People who deal with people—are the most optimistic people in the world.
Need proof? According to a job opportunities survey jointly conducted by the Society for Human Resource Management and CareerJournal.com, two-thirds of 644 human resource professionals (and 360 employees and/or job seekers) believe the economy will actually improve in the next year.
Interestingly, while both groups of respondents were a tad gloomier about the near term, employees and those out of work were more optimistic than HR types. Thirty-seven percent of employees expect economic improvement in the next six months, while just 23 percent of HR executives foresee a bump-up.
The outlook for the job market, while not overly bullish for the near term, was bright beyond that. About two-thirds of the HR respondents—and close to half of surveyed employees—thought that the job market would stay about the same during the next six months. But 61 percent of HR professionals and 56 percent of employees see improvement in the next year.
Buoyancy or a symptom of denial? Hard to say. "My fear is that optimism among job hunters and recruiters may be wishful thinking," said Tony Lee, editor-in-chief of CareerJournal.com. "We haven't seen any evidence that hiring will improve later this year, which means it may be 2004 before we see a meaningful uptick in demand."
Still, HR managers expect a sustained increase in hiring in their own outfits. Thirty-two percent of them expect hiring boosts in the next 6 months and 47 percent expect increases in the next 12 months.
HR managers and workers/wannabe workers differed sharply, however, on the topic of layoffs. While 48 percent of HR professionals reported that their organizations had layoffs in 2002, just 27 percent expect to see people let go in the next six months.
Conversely, one-third of the employees surveyed were laid off in 2002. Of those who stayed employed, nearly half expect to see layoffs at their companies in the next year. Hardest hit were high-tech workers, with 66 percent of the respondents experiencing layoffs in 2002, followed by the manufacturing sector (63 percent) and insurance industry (56 percent).
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