Merrill Lynch & Co. and Goldman Sachs Group Inc. face increased pressure by New York State Attorney General Andrew Cuomo to settle claims they misled investors on auction-rate debt as Wachovia Corp. agreed to buy back $9 billion of the bonds.

Merrill's prior offer to repurchase $10 billion of the securities was inadequate and the firm may face ``imminent'' legal action, Cuomo said yesterday.

New York has subpoenaed about 25 firms involved in sales of auction-rate securities, including five that then settled. Goldman is among the firms being probed, he said.

Wachovia joined Citigroup Inc., Morgan Stanley, JPMorgan Chase & Co. and UBS AG in settlements stemming from a nationwide investigation into why auction-rate securities were marketed as safe as cash until the $330 billion market collapsed. Regulators have sought auction-rate buybacks for customers, reimbursement for consumers forced to sell securities at prices below face value and relief for institutional investors.

Former Mississippi Gov. Ronnie Musgrove, who is running for the seat vacated by Republican Trent Lott, has not been charged and says he did nothing wrong, but Republicans quickly seized the opportunity to slam him for taking the money.

Robert Moultrie and Nixon Cawood Jr., executives with The Facility Group of Smyrna, Ga., pleaded guilty to giving Musgrove an illegal $25,000 "gratuity" during his 2003 gubernatorial re-election campaign. Musgrove lost the race to Republican Haley Barbour.

The Facility Group managed construction of Mississippi Beef Processors LLC, a cattle plant that closed just three months after it opened in 2004, costing 400 jobs and sticking Mississippi taxpayers with $55 million in state-backed loans.

The group said Monday it intends to ask a judge in Collin County, Texas, to postpone the shareholder meeting EDS has scheduled for July 31, when investors are scheduled to vote on whether to approve HP's takeover of the Plano, Texas-based company. A hearing is set for Thursday on the group's request.

The group believes that the EDS board agreed to sell the company for too little money.

HP is offering $25 per share for EDS, a nearly 33 percent premium over where EDS stock stood before the proposed acquisition was announced in May. Including debt held by EDS, HP values the acquisition at $13.9 billion.

Investment firms didn't draw such loans for the week ending July 9. They borrowed just $1.7 billion in the previous week ending July 2, down from $6.1 billion in the week before that. Such borrowing rose as high as $38.1 billion in early April.

The Fed opened its emergency program to investment firms on March 17.

At that time, the investment houses were given similar loan privileges as commercial banks after a run on Bear Stearns pushed the nation's fifth-largest investment bank to the brink of bankruptcy. The situation raised fears that other Wall Street firms might be in jeopardy. Bear Stearns was eventually taken over by JPMorgan Chase in a deal that involved the Fed's financial backing.

Banks, meanwhile, averaged $12.9 billion in daily borrowing over the past week. That compared with $14.9 billion in the previous week.

The identities of commercial banks and investment houses are not released.

In the broadest use of the central bank's lending power since the 1930s, the Fed in March scrambled to avert a market meltdown by giving investment houses a place to go for emergency overnight loans. The program will continue for at least six months. Commercial banks and investment companies now pay 2.25 percent in interest for the loans.

Separately, as part of efforts to relieve credit strains, the Fed auctioned $21.3 billion in Treasury securities to investment companies Thursday.

The auction drew bids for less than the $25 billion the Fed was making available, which was viewed as possible sign of some improvements in credit conditions.

In exchange for the 28-day loans of Treasury securities, bidding companies can put up as collateral more risky investments. These include certain mortgage-backed securities and bonds secured by federally guaranteed student loans.

The auction program, which began March 27, is intended to make investment companies more inclined to lend to each other. A second goal is providing relief to the distressed market for mortgage-linked securities and for student loans.

CBS Corp.'s CBS Broadcasting subsidiary, News Corp.'s Fox network and other major network affiliate groups sued EchoStar 10 years ago in South Florida to prevent the Englewood, Co.-based company, which operates the DISH satellite network, from providing distant network signals to customers who can receive local affiliates' broadcasts through regular antennas.

The Satellite Home Viewer Act of 1988 allowed carriers such as EchoStar to provide secondary transmissions of copyrighted distant network programming to "unserved households," those that could not otherwise receive the signals.

The lawsuit claimed that EchoStar was infringing on network copyrights by providing the signals to "served" households as well.

After a two-week bench trial in 2003, the district court found that EchoStar retransmitted network programs to hundreds of thousands of served homes, which it called "willful or repeated" copyright infringement. That ruling was upheld by the 11th U.S. Circuit Court of Appeals, and the U.S. Supreme Court declined to consider an appeal in January 2007.

According to court documents, EchoStar complied with an injunction that went into effect Dec. 1, 2006, by disconnecting distant network channels to about 900,000 customers — at a loss of $25 million a year.

The lead attorney for the plaintiffs on Wednesday called the governor's action unprecedented.

"I've never seen anything like this," said Florida lawyer Michael Papantonio. "This just further delineates how badly the deck is stacked in West Virginia against people trying to recover when they're taking on DuPont. It's stacked against people who have been wronged by corporate America."

The jury in Harrison County Circuit Court last fall awarded damages totaling nearly $400 million to residents living near the former plant in Spelter. The plaintiffs argued the chemical giant spent decades downplaying and lying about health threats from arsenic, cadmium and lead that contaminated air, soil and water.

Punitive damages are designed to deter future misconduct, and the jury ruled that DuPont had engaged in wanton, willful and reckless conduct in its operation of the smelter. Non-punitive damages included $130 million to fund a 40-year health screening plan to monitor plaintiffs for any ailments related to exposure to chemicals.

Last week, DuPont appealed the entire verdict, arguing it has been unfairly punished for doing the right thing at the site and for the community. The state Supreme Court, which is in summer recess, has not yet indicated whether the appeal will be heard.

In a "friend of the court" brief filed last week, Manchin urged the justices to clarify what sort of appellate review is to be afforded DuPont under its constitutional right to due process. His lawyers cited a 2003 U.S. Supreme Court decision to argue that the 14th Amendment guarantees appeals of punitive damages.

MBIA Inc. reported Monday a loss of more than $2 billion for the first quarter after taking a $3.6 billion charge for losses on derivatives, but shares of the embattled bond insurer traded as much as 10% higher.

Posting its third straight quarterly loss, MBIA continues to struggle with business difficulties in the face of falling house prices and a global credit crisis, but Chief Executive Jay Brown sounded an optimistic note.

"MBIA continues to be a sound financial institution," Brown said in a statement. "We have ample liquidity, our balance sheet is built to withstand credit stress levels many multiples of what we're experiencing now, and our business model is proving that we are adequately capitalized to satisfy any potential claims on our insured portfolio."

Shares of MBIA rose more than 6% to $10.04 in morning action, after reaching an intraday high at $10.35.

The company's net loss was $2.41 billion, or $13.03 a share. MBIA had earned $198.6 million, or $1.46 a share, in the year-earlier first quarter.
During the latest quarter, it recorded a $3.6 billion unrealized loss on insured derivatives.