THE Federal Reserve stood still, but executives were on the move at Chrysler and Fidelity. The bidding for Barneys escalated and prosecutors won a guilty verdict in a significant options backdating case.þþSTANDING PAT In a move that surprised just about nobody, the Federal Reserve unanimously voted this week to leave the benchmark short-term interest rate at 5.25 percent. þþOptimists on Wall Street had hoped the Fed would hint that a rate cut was coming in the months ahead because of all the recent stock market tumult created by the fallout in the credit market. They got less than that, but the Fed did at least suggest it would consider cutting rates if economic conditions worsened considerably. þþFor now, however, its focus remains on inflation, which central bankers said was the biggest threat to the economy. Wall Street will look for justification for the Fed’s position in the government’s monthly inflation report, which comes out on Wednesday. JEREMY PETERS þþAN EXECUTIVE PHOENIX Chrysler and the auto industry were surprised on Monday when Cerberus Capital Management named Robert L. Nardelli as the chief executive at the auto company. þþMr. Nardelli, who has no automotive experience, was last in the news for his tumultuous January ouster at Home Depot, where he clashed with shareholders and took home a $210 million severance package, including payments to compensate him for his pension from General Electric.þþCerberus officials stressed Mr. Nardelli’s background at G.E., where he ran the business that makes big turbine engines and was a candidate to succeed John F. Welch as chief executive. But Chrysler, experts say, will be a tough assignment for Mr. Nardelli, whose arrival meant the demotion of its previous chief executive, Thomas W. LaSorda.þþMr. LaSorda is now in charge of Chrysler’s labor talks with the United Automobile Workers union, which will help determine the wages and benefits that the automaker pays in the future. MICHELINE MAYNARDþþSTEPPING ASIDE On Tuesday, Ellyn McColgan, widely viewed as a possible heir apparent to the chief executive of FMR, the parent company of the mutual fund company Fidelity, unexpectedly quit.þþThe departure of Ms. McColgan, a 17-year Fidelity veteran, came just three months after she had been promoted from president of Fidelity Brokerage to head of distribution and operations. But it also came after Rodger Lawson was named president of Fidelity, an appointment that required her to report to him, rather than to Fidelity’s chief executive, Edward C. Johnson III. Fidelity watchers say she was angered at the new layer of management, which made her ascendancy look less likely.þþHer departure again raised questions about succession at Fidelity, where the 77-year-old Mr. Johnson seems unable to assemble a likely team of successors. His reluctance to pick future leaders and keep them in place long enough to reassure the mutual fund world that he is capable of ceding some power raises questions about Fidelity’s future. GERALDINE FABRIKANTþþTHE LUXURY AISLE Barneys New York, the department store known for $10,000 suits, became an unexpectedly expensive proposition itself after a bidding war between companies from Japan and Dubai. þþOn Thursday, the auction ended with Istithmar, an arm of the Dubai government, agreeing to buy the department store chain for $942 million — more than twice what Barneys owner, Jones Apparel, paid for it. þþFor Jones Apparel, the sale was a coup — and a much-needed one. The $5 billion clothing conglomerate, which owns brands like Nine West and Anne Klein, is in trouble, and the proceeds from the Barneys deal will be reinvested in its struggling brands. þþThere was one casualty, however. Fast Retailing, a fast-growing Japanese company that bid $900 million for Barneys, badly wanted the chain as it tries to expand into the United States with brands like Uniqlo (which opened recently in Manhattan).þþThe future of Jones Apparel remains uncertain. The big question is, Can the $542 million profit from the Barneys sale resuscitate middle-of-the-road clothing labels like Evan-Picone and Norton McNaughton?þþMICHAEL BARBAROþþOPTIONS VERDICT Federal prosecutors won a guilty verdict Tuesday in the first options backdating case to go to trial, emboldening their efforts to crack down on similar frauds. þþGregory L. Reyes, the former chief executive of Brocade Communications Systems, was convicted on all 10 counts of conspiracy and securities fraud, ending the five-week trial in federal court in San Francisco.þþThe decision reverberated throughout Silicon Valley and law offices across the United States, where it was seen as a litmus test for whether a jury would believe that backdating was a crime. Over the last year, regulators examined dozens of companies where they found a suspicious pattern of stock option grants that created a built-in profit for executives. Most of the backdating cases, including the one against Mr. Reyes, hinge on proving that the defendants knowingly manipulated an option grant date to defraud investors. þþThe Reyes verdict was seen as ominous for executives currently in the cross hairs of federal investigators. At least 16 executives at 8 companies have been charged with backdating-related crimes. Seven have pleaded guilty and the rest are either awaiting trial or, in the case of Jacob Alexander of Comverse Technologies, fighting extradition in Namibia.þþERIC DASHþþ
Source: NY Times
