Online Brokerage To Be Acquired
One of L.A.’s biggest independent stock brokerages will lose its independence after agreeing last week to be acquired by Pittsburgh-based Mellon Bank.
Pacific Brokerage Services Inc., which will become a local division of Mellon, is a national leader in online discount trading, helping customers make their own stock trades on the Internet for a small fee. That niche has become increasingly popular in recent years with the growth of the Internet and development of faster, more reliable technology.
The purchase price is estimated at $140 million. Pacific Brokerage President Steven Wallace will remain as president of the brokerage for at least three years under terms of the deal.
Court Sides With Venice Vendors
Venice Beach is safe for vegans, conspiracy theorists and psychics once again.
The Ninth Circuit Court of Appeals last week shot down a Los Angeles city ordinance that banned unlicensed street vendors from hawking their wares within city limits unless they were selling newspapers or represented non-profit organizations. The 1991 law applied to the entire city but was aimed at Venice Beach, where licensed merchants complained that street vendors were stealing business.
But in 1995, two Venice Beach street merchants Robert “Jingles” Newman, who sells T-shirts promoting his pro-vegetarian group Animal Freedom Fighters, and Harry Perry, who sells religious recordings sued the city on the grounds that the ordinance is unconstitutional.
The federal court last week ruled in their favor, saying the city was trying to restrict the First Amendment free speech rights of street vendors. The ruling is unlikely to have much effect, though, because police stopped enforcing the ordinance shortly after the suit was filed two years ago.
Merisel Woes
El Segundo-based computer equipment distributor Merisel Inc. announced last week that a disagreement with a shareholders’ committee on a debt restructuring plan could cost the company $48 million.
The company had scheduled a shareholders’ meeting for Aug. 29 to vote on the restructuring plan, under which shareholders would decide whether to retire $125 million in debt by exchanging the 12.5 percent senior notes they hold for 80 percent of the company’s common stock.
But because of an inability to reach an agreement with an ad hoc committee representing the holders of the senior notes, the meeting was postponed until Sept. 18.
As a result, Merisel decided to break an agreement with debt holders that called for the company to hold a shareholders’ vote by Aug. 31. That will force Merisel to resume $8 million in interest payments on its notes and make amortization payments totaling $40 million on debts from its operating subsidiaries.
The company has requested a waiver of the agreement with debt holders, but there is no guarantee the waiver will be granted.
Rent Control Loss for Landlord
A Santa Monica landlord who sued the city for allegedly confiscating the value of his apartment building came out on the losing end of a state Supreme Court decision last week.
Earl W. Kavanau bought a 10-unit apartment building and invested heavily in improvements in 1988, but when he tried to raise rents to recoup his investment he was told by the Santa Monica rent board that he could hike rents by only 12 percent a year. Kavanau, an attorney, filed suit.
Although a state Court of Appeals ruled in his favor four years later, after which Kavanau raised rents by up to 85 percent, the landlord filed another suit against Santa Monica claiming the city owed him $140,000 in rent lost during the years of litigation.
The California Supreme Court last week ruled that cities don’t have to compensate landlords for losses caused by illegal rent curbs if the money can be recouped from tenants through future rent hikes. The decision was a victory for city governments throughout California, which feared that a ruling in favor of Kavanau would have held them liable whenever they had a rent control decision overturned by higher courts.
Medi-Cal Criticism
A non-profit group called the Latino Coalition for a Healthy California released a report last week attacking the state’s new managed care program for Medi-Cal patients, especially as it is being implemented in L.A. County.
The report claims that indigent Latinos and other minorities are in danger of falling through the cracks of a strained health care system.
Among other things, it says there have been delays in translating information on changes in Medi-Cal coverage into Spanish and other languages, and that the tiny payments under the new system to doctors and hospitals that made up the old system threaten to destroy the state’s safety net for the indigent.
About 1.2 million Medi-Cal beneficiaries in L.A. County are affected by the new system, which is expected to be fully operational next year. Under the new system, Medi-Cal patients will be allowed to choose between two health maintenance organizations.
Boss Calls It Quits
Boss Film Studios, an industry leader that has created the digital special effects for such films as “Ghostbusters,” “Die Hard” and “Alien 3,” went out of business last week.
The Marina del Rey-based effects house closed its doors because of continued losses. Company officials blamed the escalating salaries of graphic artists and animators, who are in short supply and high demand in an era of big-budget Hollywood blockbusters.
In addition, added competition from industry giants and myriad startup firms has decreased profit margins in the digital special effects business considerably.
Boss plans to auction off its supply of computers and other high-tech equipment, in addition to its collection of models such as the spaceship from “2010” and the plane from this summer’s Harrison Ford thriller “Air Force One.”
Compiled by Dan Turner
