Stock exchange won't sue over Grasso gains

NEW YORK - The New York Stock Exchange said Thursday it will not sue its former CEO and chairman over his lavish pay package, but is cutting the salaries of its top officials.

Chief executive John Thain said the potential case against Richard Grasso is in the hands of the Securities and Exchange Commission and New York state regulators. Both offices had previously indicated they were looking into the issue of Grasso's pay.

Grasso was ousted from the exchange in September over a $187.5 million compensation package.

Thain announced Thursday that senior executives of the exchange would receive pay cuts ranging from 10 to 20 percent of their salaries, effective immediately. The cuts do not affect bonuses.

Thain, who started at the NYSE last month, has a $4 million annual salary.

Mutual fund pioneer agrees to settlement

BOSTON - The company credited with inventing the mutual fund 80 years ago was formally swept up in the improper fund trading scandal Thursday, as Massachusetts Financial Services agreed to relinquish $350 million in a deal that also forced out two top executives.

The agreements reached with the Securities and Exchange Commission and regulators in New York and New Hampshire also restrict chief executive John Ballen and president Kevin Parke from certain types of jobs in the fund industry for three years.

Late Thursday, MFS' parent company named Robert J. Manning, previously chief fixed income officer, as MFS' new CEO. Toronto-based Sun Life Financial also expressed satisfaction with the settlement.

MFS will pay $175 million in restitution to investors and $50 million in penalties, as well as reduce fees charged to shareholders by $125 million.

Don Pablo's operator files for bankruptcy

Avado Brands Inc., which runs the Don Pablo's Mexican Kitchen restaurant chain, has filed for bankruptcy.

Avado said it reached agreement with DDJ Capital Management LLC for a $60 million loan to help fund operations during reorganization. The company, which has five Don Pablo's in Greater Cincinnati, said it is negotiating with secured lenders and bondholders to develop a recovery plan. Avado listed $228 million of assets and $263 million of debts in the filing in U.S. Bankruptcy Court in Dallas.

Delta won't expand Song unit, for now

Delta Air Lines Inc.'s Gerald Grinstein, who became chief executive Jan. 1, has delayed plans to expand the company's Song low-fare unit at least until he finishes a review of Delta's operations, a spokeswoman said.

Grinstein said Jan. 14 that he and Jack Smith, who will become Delta's chairman in April, will decide by a July board meeting whether to "pursue a major strategic shift." The Wall Street Journal reported Thursday that Grinstein had shelved the Song expansion put in place by his predecessor, Leo Mullin.

Delta, which lost $2.07 billion in the last two years, is seeking ways to lower expenses.

Mortgage rates up slightly this week

WASHINGTON - The average rate on 30-year mortgages increased to 5.72 percent, up from 5.68 percent last week, Freddie Mac said Thursday.

For 15-year mortgages, rates rose to 5.03 percent this week, up from 4.97 percent last week.

Rates for one-year adjustable mortgages increased to 3.61 percent compared to 3.59 percent last week.

It marked the second week in a row that mortgage rates went up.

Macintosh users now can video chat on AOL

SAN JOSE, Calif. - Apple Computer Inc. released a new version of its iChat software Thursday so Macintosh users can now do video chats with America Online subscribers who have Windows-based PCs.

The move is the latest example of Apple expanding beyond its enclosed world of Macintosh owners. Last month, Apple signed a deal allowing Hewlett-Packard Co. to bundle its iTunes digital jukebox software with HP's Windows-based PCs.

The iChat AV 2.1 version adds video conferencing support for AOL's latest version of its instant-messaging program, AIM 5.5.