William S. Lerach, the California plaintiff’s attorney who helped turn class-action lawsuits into a lucrative trend, pleaded guilty yesterday to a conspiracy charge stemming from his role in a wide-ranging kickback scheme, the Washington Post reported today. Lerach acknowledged in a Los Angeles courtroom that he and his former partners at the Milberg Weiss firm hid payments to people who served as repeat plaintiffs in their class-action suits. According to federal prosecutors, the lawyers found people who held shares — often only a few — in companies that were accused of fraud. By getting those people to sign up as early plaintiffs in civil lawsuits against the companies, Lerach and his firm were able to exert greater control over the cases and reap additional fees. In all, the scheme infected more than 150 cases over the past two decades, bringing Lerach and his partners well over $200 million, according to court papers.

U.K. banks approved the fewest mortgages in 26 months in September as borrowing costs increased, adding to evidence that the property market is cooling, Bloomberg News reported today. Lenders granted 102,000 loans for house purchase, the fewest since July 2005 and down from 108,000 in August, the Bank of England said in London today. Borrowing rates for home loans are rising after the central bank lifted its benchmark interest rate to a six-year high in July and credit dried up following the collapse of the U.S. subprime mortgage market. The Bank of England raised the benchmark interest rate to 5.75 percent in July, the highest among Group of Seven industrial nations, in an effort to curb inflation.

House Ways and Means Chairman Charles B. Rangel (D-N.Y.) yesterday unveiled a broad proposal that includes repealing the alternative minimum tax as well as reducing taxes on an estimated 91 million mostly lower- and middle-income Americans while raising them for many in the upper income brackets, the Washington Post reported today. Among the bill’s most controversial elements is a surtax of four percentage points on married couples with adjusted gross income of more than $200,000 and 4.4 percentage points for couples with more than $500,000 in income. The bill also targets the managers of hedge funds and private-equity firms as executives’ earnings would be taxed at ordinary income tax rates, which are more than double the capital gains rate they now pay. Hedge fund operators would also lose their ability to defer income taxes through the use of offshore havens. The plan would not change the amount of revenue collected, according to the staff of the Joint Tax Committee, but it would alter existing law to shift $1 trillion of the tax burden over 10 years. Rangel’s bill is unlikely to be voted on or even debated before next year. Many Democratic leaders have endorsed components of the bill, but Republicans have generally rejected it, and the debate is likely to spill into the 2008 presidential campaign.

French Labor minister Xavier Bertrand said that he will meet with unions and state-owned corporations this week to discuss the proposed reforms to certain public-sector pension schemes that sparked strike action last week, AFXNews.com reported today. The government wants to end by 2012 an arrangement that allows workers in certain state sectors to draw a full pension after 37.5 years of contributions, bringing them into line with the 40 years required elsewhere in the public sector. The government said that while it is willing to negotiate the details of the reforms, it will not give way over the extension of contributions to 40 years.

A federal judge disqualified a defense lawyer for a former partner at KPMG in the government’s high-profile tax shelter case yesterday, a surprise twist on the eve of a trial that has now been postponed indefinitely, the New York Times reported today. Judge Lewis A. Kaplan of Federal District Court in Manhattan disqualified Steven M. Bauer, who had represented John Larson, a former KPMG partner, stating that Bauer had a conflict of interest because he previously represented a colleague of Larson’s in the same case. In his order, Judge Kaplan indefinitely postponed the trial of Larson and three remaining defendants, which was expected to start on Tuesday. Larson was among 19 individuals, including 17 from the accounting firm KPMG, who were indicted in 2005 on charges of fraud, tax evasion and conspiracy involving the creation and sale of questionable tax shelters that authorities say kept at least $2.5 billion out of government coffers.
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Nomura Holdings Inc. said that it will close its mortgage-backed-securities business based in New York, marking the latest fallout from the meltdown of subprime residential mortgages in the United States, the Wall Street Journal reported today. Nomura, Japan’s largest investment bank by market capitalization, plans to take a $621 million write-down on residential mortgages and a charge of about $85 million for restructuring the business. That will swing Nomura to a pretax loss of as much as $511 million in the quarter ended Sept. 30. A year earlier, Nomura posted a net profit of about $2.1 billion. Combined with previous write-offs, Nomura has now taken losses of more than $1.2 billion on residential mortgages in the United States.

The Jockey’s Guild filed for bankruptcy protection from creditors on Friday, the Louisville Courier-Journal reported yesterday. Former guild president Wayne Gertmenian was listed as the guild’s top creditor as he and his consulting firm, Matrix Capital, have claims totaling more than $1 million over a contract dispute, according to the bankruptcy filing. “The guild has struggled with the high cost of member health claims,” said Terry Meyocks, newly installed national manager of Jockeys’ Guild. “In looking at all of our options, we decided that this is best way to deal with this and other issues facing the Guild.”

Struggling video-rental company Movie Gallery aims to file for bankruptcy protection under a pre-negotiated deal with key creditors under which the company will convert its bonds into stock, the Wall Street Journal reported on Sunday. The Dothan, Ala., company will file for bankruptcy this month and hopes to emerge from chapter 11 in early 2008. Under the pre-negotiated plan, Movie Gallery would convert its bonds to stock, and a portion of its second-lien debt also will be converted to stock. The company had $1.2 billion in debt as of July, including $322 million in bonds, $175 million in second-lien debt and $600 million in first-lien debt. Movie Gallery operates more than 4,600 video rental stores in the United States, Canada and Mexico. In July, the company failed to meet financial covenants of its senior loan from Goldman Sachs Credit Partners. The company attributed the covenant breaches to softer-than-expected second-quarter results.

The United Auto Workers union stepped up the pace of negotiations with Chrysler LLC over the weekend, signaling that union leaders plan to test the auto maker’s new private-equity owners before moving on to Ford Motor Co., the Wall Street Journal reported yesterday. The UAW, which began formal talks with Chrysler over the weekend, effectively put the company on notice Saturday that it could call a strike as early as Tuesday. The move could be a sign of progress in the talks, suggesting that the UAW feels a deal is close enough that it can set a deadline, to push final issues to a resolution. A short strike at Chrysler may have little significance, because Chrysler already has five plants closed this week amid soft market demand. Ford and Chrysler are operating under indefinite extensions on contracts that ended Sept. 14.

A U.S. bankruptcy judge on Wednesday gave Interstate Bakeries Corp. (IBC) a final 30 days to settle differences with a key union and come up with a plan to begin bringing the maker of Wonder bread and Twinkies snacks out of bankruptcy, Reuters reported yestereday.  IBC, one of the largest U.S. commercial bakers and distributors of fresh-baked bread and sweet goods, said it has identified at least three potential investors that could help save the company from liquidation, but it must reach agreement with the International Brotherhood of Teamsters on certain issues first. Teamsters attorney Frederick Perillo said there was little chance the union could reach an agreement with IBC and argued in court that the union should be allowed to talk directly with potential investors immediately.