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To: scion who wrote (11401)	3/23/2003 10:25:37 PM
From: StockDung	Respond to of 19428

Report: Wall Street Firms May Limit Costs By MICHAEL GORMLEY .c The Associated Press ALBANY, N.Y. (AP) - Wall Street brokerages accused of biased stock ratings that hurt investors' savings and retirement funds may be able to limit the cost of a government settlement through tax write-offs and insurance claims, according to an industry spokesman, regulators and a state report. ``The firms will try to do both,'' said Darren Dopp, spokesman for New York Attorney General Eliot Spitzer who pressed the conflicts-of-interest settlement now in its final negotiations. ``We don't believe the firms will have the ability to write off large amounts, but it's not our call ... we have to wait and see and read the final findings. That will determine an awful lot.'' Critical will be whether and how firms admit to fraud or other wrongdoing in the case. Their analysts are accused of inflating ratings of stocks that they privately deemed risky to attract the companies' investment banking business. In December, the firms agreed to structural reforms, to fund an independent source of stock analysis and to pay $1.4 billion in penalties based on the amount of evidence against each firm. Internal Revenue Service spokesman Anthony Burke said penalties or fines, if the settlement identifies the payments that way, normally wouldn't be deductible. IRS regulations state that firms can't deduct the cost of a government penalty ``in a settlement of actual or possible liability for a fine or penalty.'' However, firms could deduct legal fees and related expenses, according to IRS statutes provided by Burke. ``From an insurance standpoint, certain things could be covered, certain things could not be covered,'' said Dan Michaelis, vice president of corporate communications of the Securities Industry Association, a New York City-based trade group for brokerages. ``There's simply not enough information on the final structure itself, to really take a position on the tax deductibility of it.'' A spokeswoman for Citigroup's Salomon Smith Barney, which is expected to pay the largest fine of more than $300 million, didn't respond to questions on the insurance and tax issues. ``The banks involved are working hard to try to word the agreement in such a way as to make sure they are not admitting something that would be interpreted as a criminal violation,'' said Robert Hartwig, chief economist for the Insurance Information Institute, a trade association based in New York City. Insurers plan to ``resist that strenuously,'' he said, noting such large losses eventually are passed on to the public. ``It would set a horrific precedent.'' Since December, the settlement has reduced the securities industry's taxable profits by $2.2 billion, according to a footnote buried deep in a New York state Assembly Economic Report released two weeks ago. Another $1.1 billion could be written off as a further ``operating expense'' as a result of the settlement this year, the report stated. That reduces the firms' corporate taxes but also cuts Wall Street bonuses to individuals, a substantial source of personal income tax revenue for New York and other states suffering deficits. ``It's entirely appropriate,'' said E.J. McMahon, a senior analyst with the conservative Manhattan Institute. ``It's not like some loophole or escape hatch,'' he said of the write-offs for business losses. Without the loss writeoff, the securities industry on which state revenues depend greatly would have more difficult bouncing back from the two-year plummet of the stock market, he said. A New York state Budget Division spokesman didn't immediately know how much the tax write-off might cost the state in revenues. He noted it would be offset by the state's share of penalties. Spitzer said New York will get about $70 million. 03/23/03 14:26 EST

To: scion who wrote (11401)	3/23/2003 10:38:51 PM
From: StockDung	Respond to of 19428

U.S. Treasuries Rise as War Intensifies in Town of Nasiriyah By Angela Jones Singapore, March 24 (Bloomberg) -- Treasuries rose after U.S. Marines engaged in the fiercest fighting of the war in Iraq at the town of Nasiriyah, boosting demand for the haven of debt. Investors drove up prices on top-rated government securities after reports that allied soldiers were captured in Iraq drove U.S. stock index futures lower. Standard & Poor's 500 Index futures for June delivery dropped 1.1 percent to 883.50, signaling that U.S. shares may open lower today. ``Things haven't gone as smoothly as some had predicted,'' said Alison Briggs, who has been buying 10-year notes for the equivalent of $1.8 billion she helps manage at Aberdeen Asset Management Ltd. in Sydney. ``There's been a reasonable bounce in bonds on the news that we've seen over the weekend of prisoners of war and some of the battles.'' The 3 7/8 percent note maturing in 2013 rose 17/32, or $5.31 per $1,000 face amount, to 98 22/32 at 10:06 a.m. in Singapore. Its yield fell 7 basis points to 4.03 percent. The 1 1/2 percent 2005 note rose 5/32 to 99 19/32. Its yield fell 7 basis points to 1.71 percent. A basis point equals 0.01 percentage point. Ten-year notes last week had their biggest decline since December 2001 as investors surmised the U.S.-led war against Iraq will end within weeks. Some of that loss was pared after U.S. Defense Secretary Donald Rumsfeld said on Cable News Network yesterday, ``I think it's reasonable to expect that it might be much more fierce.'' Crude Oil Crude oil rose as much as 2.9 percent after Marines engaged Iraqi troops at Nasiriyah. Oil for May delivery rose as much as 79 cents to $27.70 a barrel in after-hours electronic trading on the New York Mercantile Exchange. Qatar-based Al Jazeera television broadcast Iraqi television videos showing captured and killed U.S. soldiers. U.S. officials said 12 soldiers were believed captured near Nasiriyah. Since the war started five days ago, 30 coalition troops have been killed: 14 from the U.S. and 16 from the U.K. The number of dead doesn't include combatants in the battle of Nasiriyah, a river crossing 185 miles (298 kilometers) southeast of the Iraqi capital, Baghdad. About 25 U.S. and U.K. Marines were killed, the Iraqi military said. The U.S. Central Command declined to give casualty figures. ``This bad news is seen as eroding some of the market's perception that it will all be over in a day or so,'' said David Plank, a bond strategist at Deutsche Bank AG in Sydney. ``The risk is that the market got too optimistic about how fast things will go.''