Wednesday, January 18, 2006
New Jersey settles for less
Perhaps that should have been the new state slogan instead of "Come See for Yourself."Whether it's gas price fixing, poisoning groundwater, or just plain lying to customers, businesses know they can post a big profit without facing much of a penalty in New Jersey.
For instance, although former Gov. Richard Codey put on a dog-and-pony show about using the state's 67-year-old gas price fixing law this summer when gas hit $3 a gallon, the state settled its case against BP for just $315,000 in fines during his last week in office.
The settlement came a day after the U.S. Supreme Court agreed to hear similar complaints that ChevronTexaco Corp. and Shell Oil Co. violated antitrust laws and fixed prices back in the '90s.
Of course, New Jersey drivers who got gouged won't see a dime back. The money will be used to cover investigative costs and to fund consumer education programs. Meanwhile, BP admitted no wrongdoing.
Ditto for pharmeceutical giant Merck & Co., which shucks off blame for poisoning groundwater at four sites, but will pay $2.4 million to help clean them up. The firm is also donating 10 acres of land near the Rahway River and funding a $30,000 restoration project in the Passaic River watershed.
Environmental Protection Commissioner Bradley M. Campbell actually had the balls to say in a news release, "New Jersey's residents will benefit from these monetary and land settlements through cleaner water resources and more public habitat to enjoy."
So, it's actually a good thing Merck let chemicals used to manufacture prescription drugs seep into the ground. Maybe, Campbell has a well at his house.
At least Blockbuster video customers will see some but not much money back from the $1.25 "restocking fees" they were forced to pay under the company's "no late fees" program which barely lasted a year despite high publicity.
The nation's largest movie-rental chain agreed to pay $140,000, but admitted no wrongdoing. About $90,000 will be returned to 75,000 consumers (you can do the math). The other $50,000 will pay for state investigative costs, Attorney General Peter C. Harvey said.
New Jersey also settled its first lawsuit involving its Do Not Call Law, with a Union Township company, Total Remodeling Inc., agreeing to pay $151,500 to settle penalties and state legal costs in exchange for having its charges dropped.
Codey touted the settlement as a victory, saying, "We don't tolerate those who violate the law and intrude upon our residents when they are enjoying quality time at home with their families."
But the dollar value of the settlement hardly sends a stern message.
This one does. New Jersey will get nearly $25 million - the largest sum ever collected by the state in a securities matter - from UBS Financial Services Inc., which agreed to settle charges it failed to properly supervise brokers who engaged in deceptive market-timing activities.
Brokers in at least seven UBS branch offices allegedly used market-timing, a practice in which investors sell shares in funds just before or after the close of trading when it's likely that those shares would lose value. The value of mutual fund shares is recalculated once daily, after the close of trading, and market-timing takes advantage of the time between the market's close and that recalculation to sell fund shares and prevent losses, which are absorbed by the fund company and, ultimately, the company's fund investors.
The state similarly hit the bonus round - a $10 million settlement - in a lawsuit against defunct hedge fund Canary Capital Partners LLC, proving you can get blood from a stone.
Secaucus-based Canary, two of its units and managing principal Edward J. Stern were accused of trading after hours, when mutual fund prices are frozen, to reap profits from after-hours events that affect a stock's price the next day.
Most other states would have called both the UBS and Canary cases fraud and locked everybody up.
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This work is licensed under a Creative Commons Attribution 2.5 License.
This work is licensed under a Creative Commons Attribution 2.5 License.
