Marketplace: News Archives

Tuesday, December 26, 2000
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It's Tuesday, December 26, 2000. I'm David Brancaccio.

More than a million NASDAQ investors expecting to receive cash right about now from a billion dollar price-fixing are being assured that it's on its way. Marketplace's Michelle Brier reports.

Brier: "The checks might be in the mail but heavy holiday volume at the post office is apparently delaying payments totaling a billion dollars to individual and institutional investors who claimed they were cheated in the mid 1990s. Nasdaq marketmakers were accused of conspiring to bilk investors by fixing spreads - the difference between a stock's buy and sell price. The class action lawsuit followed a 1994 academic study looking into unusual wide spreads, says Jay Peake, a finance professor at the University of northern Colorodo, who testified as an expert witness for the plaintiffs."

Peake: "And they found out that an awful lot of these market makers supposedly were quoting exactly the same prices in even quarters."

Brier: "The case sparked a government crackdown and regugulatory changes which Peake says are long overdue, such as the move toward decimalization."

Peake: "First of all we did not have spreads that could be as small as one cent which we are now heading toward and should have by April and that will help a lot. Secondly, we did not have a marketplace in which all bids and offers can interact directly."

Brier: "The NASDAQ itself was not accused in the scheme and under the settlement, the marketmakers did not admit or deny wrongdoing. Investors who filed claims by the 1999 deadline can expect to get about $2.47 a share, with payouts ranging from 25 to 11 million dollars.in New York I'm Michelle Brier for Marketplace."

Some big chain stores got on the horn to Wall Street today to say that business in December is turning out to be underwhelming. Federated, which owns Macy's and Bloomingdale's had been saying sales would go up three percent compared to December of last year. Today the company said the increase could be as low as one percent. WalMart had been saying sales would rise between 3 and five percent, but there's word that the company will miss those forecasts. Walmart shares fell three point six percent today; Federated dropped four tenths percent. Shares in Burlington Coat Factory, however, rose four and a third percent. Why? Because it's cold and they sell coats. If you don't like a stocks performance, you can only sell it…you can't take it back for a refund, a luxury that's only enjoyed by the stores' customers. Reporter Marty Goldensohn has the latest from the Boxing Day return lines.

Goldensohn: "Sometimes you buy too large, sometimes too small. Either way you send messages. At the Gap in Ridgewood NJ, Marcello, a 30-something husband is returning gray flannel winter night pajamas with snowflakes that he bought his wife. Too big. But he's in luck because he listened..."

Marcello: "...happy it didnt fit..."

Goldensohn: "Husbands are expected to get the wrong size. But sometimes even Moms do. The question is why?"

Marcello: "Wishes I were little...deep size denial."

Goldensohn: "With a couple more Mall tales, not tall tales. I'm Marty Goldensohn for Marketplace."

Ott: "Critics have already labeled the incoming administration Bush-Cheney Inc., for it's close ties to corporate America, but consumer advocate Arthur Levin of the Center for Medical Consumers says tapping Mitchell Daniels of the pharmaceutical giant Eli Lilly to head the OMB is especially worrisome."

Levin: "Looking to this kind of corporate executive coming out of an industry that's under tremendous pressure, that's very controversial in terms of its pricing policy and its role in health care - isn't a good sign for the future."

Ott: "While Daniels won't be directly responsible for health policy - he will hold one of the most powerful positions in Washington as Congress tackles Medicare reform and adding a new prescription drug benefit. Daniels has publicly supported a Medicare drug benefit based on competition among private-sector options. From the WGBH Health Desk, I'm Tanya Ott for Marketplace."

Henn: "The Clinton's spent this Saturday checking out their top choices for a new home in the nation's capitol and for the first time President Clinton reportedly tagged along. While no one at the White House is talking about where the Clinton's will be moving on January 21, rumors of which houses are on the short list abound. All of them are expensive. One leading contender, a brick colonial nestled between several embassies and next to a park, was listed at $3.5 million dollars. And this Saturday, hordes of secret service agents were seen escorting an unknown potential buyer in and out of the house the next day the for-sale sign came down. The owners of the house, and the real estate agent who listed it aren't talking, but the first Lady's office let slip an announcement could come as early as tomorrow. So if the Clinton's have in fact made their pick - what will their mortgage look like? Well with a million dollars down - their payments would be roughly $23,000 a month. Of course - now that Senator-elect Hillary Clinton has signed an $8 million dollar book deal - they could just pay cash. In Washington I'm Stephen Henn for Marketplace."