Year-End Review of Markets & Finance 2002 --- A Year of Scandals & Sorrow
By Laura Saunders Egodigwe, John C. Long and Nima Warfield

01/02/2003
The Wall Street Journal
R10
(Copyright (c) 2003, Dow Jones & Company, Inc.)

The year began in the shadow of Sept. 11, 2001, and would soon cast shadows of its own. On Wall Street, a parade of corporate scandals put executives in handcuffs and led companies to restate billions on their balance sheets. The SEC made CEOs swear results were accurate. A succession of bankruptcy-court filings made history. The stock market ended lower for a third straight year. In politics, the Democrats lost Congress, and the Republicans lost their Senate majority leader.

Shadows fell across the international scene as well. The U.S. was spared another major terrorist attack, but Indonesia, Kenya, Russia and Pakistan weren't, and there was no end to Palestinian suicide bombs and Israeli gunfire. Afghanistan got a new government, but one vexed by warlords and al Qaeda. Daniel Pearl lost his life. Osama bin Laden was apparently still at large. The U.S. worked through the U.N. to seek Iraq's disarmament, but as the year ended, the threat of war still loomed, and North Korea flouted both the U.S. and the U.N. by rattling nukes.

Here is a summary of the news events as chronicled on the front page of The Wall Street Journal. In most cases, the dates reflect when the items were published.

JANUARY

2: More than 300 million Europeans start 2002 with a new currency; the euro proves popular on its first day of official business.

The FDA rejects ImClone's application to market the cancer drug Erbitux, dealing a setback to the biotech firm and its partner, Bristol-Myers Squibb.

Argentina's political crisis yields the nation's fifth president in two weeks, Eduardo Duhalde, a Peronist senator.

4: The investigation of Sen. Torricelli ends as prosecutors decline to file charges in the long graft inquiry. A Senate inquiry goes on.

An apparent anthrax hoax letter arrives in Senate Majority Leader Daschle's office.

7: Argentina says it is devaluing the peso by 29%, breaking the currency's decade-old 1-to-1 peg to the dollar in a risky effort to shift the country out of a four-year recession.

The leaders of India and Pakistan meet and shake hands at a regional summit in Nepal as war tensions between the two nuclear-armed neighbors ease further.

Enron agrees to let Dynegy buy a pipeline unit that was a centerpiece of the companies' failed merger deal.

9: Alcoa posts a quarterly loss for the first time in nearly a decade.

Died: Wendy's hamburger-chain founder Dave Thomas, of liver cancer, at age 69.

10: The Justice Department confirms it will pursue a criminal probe of Enron, focusing on possible accounting fraud.

Merrill Lynch is taking a $2.2 billion charge, partly to pay for about 9,000 job cuts, in one of the steepest retrenchments on Wall Street in recent years.

11: Arthur Andersen says its employees destroyed many documents related to its work for Enron. Attorney General Ashcroft recuses himself from the Enron inquiry, citing a conflict of interest.

14: The president faints, falls and hits his head after choking on a pretzel while watching football on TV, suffering brief oxygen deprivation and a cut on his cheek.

16: An Al Qaeda PC yields possibly solid evidence of links to the shoe bomber. The computer, acquired in Afghanistan by The Wall Street Journal, contains a file on the doings of a "brother Abdul Ra'uff" who scouted targets in the Mideast. His travels were strikingly similar to those of Richard Reid.

The U.S. charges American Taliban fighter John Walker Lindh with conspiracy to kill U.S. citizens.

Arthur Andersen fires the partner who directed the destruction of thousands of e-mails and documents related to the Enron audit.

17: The shoe bomber is indicted as a terrorist who was trained by al Qaeda.

Enron's board fires Arthur Andersen as auditor amid a storm of recriminations between the companies.

Kmart's president leaves, and its chairman is replaced, as the company struggles to stave off filing for bankruptcy protection.

21: ImClone is being probed by congressional investigators amid recent setbacks at the biotechnology company.

22: Three ex-Enron employees say documents were shredded in the accounting department of the company's Houston headquarters after federal investigators had begun an inquiry into possible illegalities at the energy concern.

Willamette agrees to be acquired by Weyerhaeuser for $6.11 billion, or $55.50 a share. Weyerhaeuser CEO Steven Rogel's deal for Willamette, the helm of which he left in 1997 for Weyerhaeuser, culminates a five-year quest to buy the rival.

23: Kmart files for Chapter 11 after efforts to secure bailout funding fizzle and outlines a plan to reduce its size and emerge from court in 2003.

Tyco announces a plan to split into four separate firms focusing on electronics and security, health care, fire protection and financial services.

Amazon surprises Wall Street by posting its first-ever earnings.

Died: Stanley Marcus, 96, chairman emeritus of the luxury Neiman Marcus chain, Tuesday, in Dallas.

24: Enron CEO Kenneth Lay resigns less than 24 hours after a bankruptcy-court-appointed creditors committee seeks his removal.

Stymied anthrax investigators double to $2.5 million the reward for information on the source of the recent mail attacks.

Merrill Lynch reports a $1.26 billion quarterly loss, its first since 1998, citing a restructuring charge and expenses related to the terrorist attacks.

25: Former Enron Vice Chairman J. Clifford Baxter, who quit the energy firm in May, is found dead, an apparent suicide.

28: ImClone says the SEC and Justice Department have started inquiries into whether the company misled investors about prospects for a cancer drug.

29: Bush delivers his first formal State of the Union address, promising to defeat the twin threats of terrorism and recession. Iran, Iraq and North Korea constitute an "axis of evil," he says. Bush plays down pro-business rhetoric. Without mentioning Enron, he calls for greater protections for retirement plans and says corporate America must be held to the "highest standards of conduct."

Powell speaks to Pakistan's president to spur efforts to find and free The Wall Street Journal's Daniel Pearl, abducted while reporting on the region's conflicts.

Global Crossing files for Chapter 11 in the biggest telecom collapse so far. Global Crossing's fall is blamed by telecom executives and analysts on a confluence of factors, ranging from aggressive accounting to a "turnstile" of CEOs.

30: IBM names Samuel Palmisano, the company's president, to succeed Louis Gerstner as chief executive March 1.

31: The Roman Catholic Church in Ireland agrees to pay $110 million into a compensation fund for children sexually abused by clerics over the years; with an estimated 3,000 victims, critics say, the contribution is insufficient.

FEBRUARY

1: The sole U.S. anthrax-vaccine maker wins approval to resume shipments after years of concern over production quality.

Disney will no longer buy consulting services from the same firm that audits its books, a challenge to the accounting industry's belief that a single firm can handle both roles objectively.

4: An internal Enron report finds various improper financial transactions and massive self-dealing by company officials. Enron ex-Chairman Kenneth Lay and two other former top executives back out of testifying on Capitol Hill, where congressional hearings will probe Enron's failure.

Tyco discloses it spent about $8 billion in its past three fiscal years on more than 700 acquisitions that were never publicly announced.

Delta's flight attendants reject a move to unionize, in a big win for the carrier.

The New England Patriots won football's Super Bowl on Sunday, defeating the St. Louis Rams 20-17 in a game played under heavy security.

5: Bush announces his $2.13 trillion budget as he is cheered by troops in Florida. The military is the big winner in the fiscal 2003 spending plan, receiving a 14% increase to $379 billion for everything from pay raises to new weapons.

Kenneth Lay says he is quitting Enron's board, and lawmakers say they will subpoena him to appear before investigative panels.

6: The Nikkei 225 Stock Average falls to an 18-year low, and S&P downgrades the credit ratings of seven Japanese banks.

7: Allied Irish Banks says a rogue trader at its U.S. unit incurred losses of $750 million through unauthorized trading.

8: Bush rejects granting prisoner-of-war status to detainees from Afghanistan.

Enron's former CEO denies knowledge of improper activities by his subordinates and of many of the details of the partnerships that brought the company down, in testimony before Congress.

Arafat names two aides he said should eventually take over the Palestinian Authority and PLO, his first hint at a possible successor. They are Ahmed Qureia, the parliament speaker, and Mahmoud Abbas of the PLO.

WorldCom's CEO says the company stepped in to cover a personal loan of $198.7 million. The long-distance firm cut its 2002 forecasts and said it expects a charge of $15 billion to $20 billion.

11: "Let's roll," Bush tells U.S. athletes in a pep talk before Friday's opening of the Salt Lake City Olympics.

An ex-Lehman broker, Frank Gruttadauria, under investigation over whether he bilked clients out of as much as $300 million, turned himself in to authorities over the weekend after being on the lam for four weeks.

Died: Princess Margaret, 71, sister of Britain's Queen Elizabeth II, in London, Saturday, of a stroke.

12: Nortel's finance chief quits as the company discloses that he had sold an investment in the firm before it released news of worse-than-expected losses last year.

Died: Victor Posner, 83, prominent 1980s corporate raider convicted of securities-law violations in 1994, in Miami, of pneumonia.

13: Enron's former chairman invokes the Fifth Amendment, declining to answer any questions from a Senate panel. Separately, remarks by Kenneth Lay to an investigative committee in January indicate that on at least two occasions he may have deliberately misled the public in order to keep the firm's problems from becoming known. Enron announces the planned resignations of six board members, including four who served on its audit panel.

15: A Pakistani militant arrested this week admits abducting Daniel Pearl of The Wall Street Journal. Officials dismiss his claim that the reporter is dead.

20: CSFB fines two executives and a top broker $500,000 apiece in the aftermath of a regulatory probe of alleged abuses in how the firm handed out hot IPOs.

21: A blaze aboard an Egyptian train kills at least 370 people in the country's worst rail disaster. The crowded train was headed south from Cairo when it caught fire, forcing passengers to jump from speeding cars. Investigators suspect gas containers brought on board for cooking may have been the cause.

22: Daniel Pearl was killed by his captors, The Wall Street Journal and U.S. say. A video obtained by Pakistani investigators ends hopes of finding the 38-year-old reporter, abducted a month ago, alive. The U.S. and Pakistan vow to find and punish the killers.

The head of the CDC, Jeffrey Koplan, resigns effective March 31. He gives no reason, but the federal health agency had come under severe criticism for its handling of last year's anthrax attacks.

25: Cheney is sued by the GAO, which seeks a list of executives he met with while crafting Bush's energy plan.

26: GM raises its earnings outlook and production plans for the year amid a stronger-than-expected U.S. performance.

27: The Lyme disease vaccine is pulled off the market by its only U.S. manufacturer, which cites a lack of demand. The move comes despite a recent government report that the disease is surging in the Northeast.

A Georgia crematory owner is hit with 100 more criminal charges for stacking hundreds of corpses on his property for years instead of incinerating them as he was paid to do. The House votes to make that a felony.

MARCH

1: Israel storms two Palestinian refugee camps on the West Bank in an unprecedented operation that leaves at least 12 Palestinians and one Israeli soldier dead. Israel says militants are using the camps as hideouts. The U.S. urges Israel to show restraint.

A federal appeals court overturns the convictions of three white New York policemen in the 1997 torture of Haitian immigrant Abner Louima. The ruling didn't affect the main culprit, but still provokes an outcry.

4: Northrop launches a formal $5.9 billion hostile bid for TRW just hours after the TRW board rejects Northrop's unsolicited offer as inadequate.

Arthur Andersen agrees to pay $217 million to settle all pending litigation related to its audits of the Baptist Foundation of Arizona, which filed for Chapter 11 after its collapse in 1999.

Afghan fighting reignites, with the heaviest involvement by U.S. troops yet. Hundreds of American soldiers join 500 Afghans in an assault on a cave complex outside Gardez where al Qaeda and Taliban fighters are believed to have regrouped.

6: Bush imposes sweeping tariffs and quotas on a wide range of steel imports for three years. The move, which targets steel produced by the EU, Japan and South Korea, is likely to sustain U.S. firms that otherwise would have failed and weaken incentives for industrywide consolidation. Foreign governments and steelmakers threaten countermeasures and legal action.

Sept. 11 fund guidelines are to be revised, reportedly to boost payouts to families of victims and eliminate the deductions for Social Security and workers' compensation benefits. The original rules were roundly reviled.

7: California Republican primary voters pick political novice Bill Simon to challenge Gov. Davis in fall elections. Democratic Rep. Gary Condit is shown the door, still trailed by suspicions about the disappearance of intern Chandra Levy.

National Steel files for bankruptcy-court protection, saying its problems wouldn't be offset by industry aid.

The FTC approves H-P's proposed $22 billion acquisition of Compaq.

8: Schering-Plough plans to turn Claritin, its huge-selling prescription antihistamine, into an over-the-counter drug available in just about any store.

Conseco's CEO discloses that he fired his chief financial officer. The statement comes amid a two-day slide in the company's stock price.

Harvard Business Review's editor quits, but strikes a deal in which she will be back as editor at large. Suzy Wetlaufer is caught up in a flap over her relationship with GE's former chairman.

11: Bush marks a post-Sept. 11 milepost by outlining the war on terror's next steps. New York turns on powerful spotlights that create columns of light to memorialize the twin towers in the void their destruction tore in the skyline.

12: Qwest and WorldCom say the SEC has launched inquiries into their accounting practices.

Kmart accepts the resignation of CEO Charles Conaway, who led the retailer into Chapter 11, and hands the title to Chairman James Adamson.

13: A Florida flight school Monday receives student-visa paperwork for two Sept. 11 hijackers. The INS says the formal notices of decisions made last summer just reflected the slow grinding of the bureaucratic wheel. Bush says he was "plenty hot" to learn about it and wants an INS overhaul.

Andrea Yates is found guilty of murder by a Texas jury that rejects her claims of postpartum insanity in the slayings of her five children at their Houston home last year. A few days later, the jury sentences her to life in prison.

The U.S. homeland-security chief announces a color-coding system to identify terrorist-threat levels.

The Archdiocese of Boston agrees to pay up to $30 million to settle suits by dozens who say they were abused as children by former priest John Geoghan.

15: Andersen is charged by the Justice Department with obstruction of justice over the destruction of documents related to its Enron audit. Andersen loses some 40 clients in the wake of the Enron collapse. Lost clients include Merck, Freddie Mac and Delta Air Lines.

Delta Air Lines says it has eliminated most of the commissions it pays to travel agents in the U.S. and Canada, making it the first major carrier to do so. Continental and American later join the carrier. Travel agents begin mobilizing in response.

19: Operation Anaconda ends. The Pentagon pronounces the battle outside Gardez, Afghanistan, an "absolute success."

Donald Trump and a partner agree to sell the Empire State Building to its long-term leaseholder for $57.5 million.

20: Hewlett-Packard claims a narrow victory in its fight to win shareholder approval for its $21.4 billion acquisition of Compaq. But dissident director Walter Hewlett, who opposed the deal, says the outcome was too close to call and refuses to concede defeat until the votes of H-P shareholders are officially tallied. Compaq stockholders later endorse the company's sale to H-P by a 9-to-1 margin.

22: Andersen Worldwide begins to crack, as partners in Hong Kong, China and Russia agree to merge with rival firms, dashing efforts to forge a deal for the firm's non-U.S. operations.

Pope John Paul II breaks his silence on sex-abuse scandals rocking the Catholic Church in the U.S., Ireland, England, France, Australia and Poland. The pontiff says they have cast a "dark cloud of suspicion" on all priests.

25: Paul Volcker offers to take control of Arthur Andersen and oust top management. In February, Andersen names the former Fed Chairman to head a reform panel, but by May he acknowledges the end of his role when the panel is suspended.

PepsiCo and United Air sign a five-year accord making Pepsi the cola served on all United flights, ending the carrier's decades-long pact with Coke. Pepsi later wins a contract for sponsorship rights with the NFL, the top TV sport, in another setback for Coca-Cola.

Maryland Public Television pulls the plug on Louis Rukeyser, host of "Wall $treet Week," after he publicly criticizes plans to replace him after 32 years.

26: Shell agrees to acquire Pennzoil-Quaker State for $1.8 billion, a move that would give the firm a motor-oil brand and network of oil-change centers to go with its chain of gas stations.

A Nigerian Muslim court overturns the sentence of death by stoning handed out to a woman convicted of adultery. The case had drawn international attention to the imposition of the strict Shariah legal system in some regions of Nigeria.

27: Andersen's CEO resigns, even as the accounting firm proceeds with talks to sell its nonaudit businesses in the U.S. for over $1 billion. Joseph Berardino had come under increasing criticism from partners who believed he mishandled the fallout from Andersen's botched audits of Enron.

BAE's CEO resigns unexpectedly, prompting speculation about the future of Europe's largest defense contractor.

28: A suicide bomber kills 20 in Israel, shattering hopes for a cease-fire. The Hamas bomber blew himself up in a Netanya hotel ballroom crowded with Passover diners. More than 120 are wounded. Aides to Arafat condemn the attack, but Israel says that it holds the Palestinian leader responsible and that it would have to reassess agreements it has made so far in U.S.-led truce talks.

29: U.S. smallpox-vaccine stocks expand suddenly as French firm Aventis Pasteur discovers as many as 90 million doses at its plant in Pennsylvania.

APRIL

1: Israel is at war, Sharon declares amid a rain of suicide bombings and counterstrikes. The prime minister, speaking on a day when two attacks take 15 Israeli lives, vows an unrelenting offensive to smash Palestinian militants.

Died: Britain's Queen Mother Elizabeth, 101, Saturday, near London.

2: Xerox plans to restate earnings covering four years and pay a $10 million civil penalty to settle SEC charges that it engaged in fraudulent accounting practices. The fine would be the largest the agency has levied against a public firm in connection with financial-reporting violations.

3: The SEC is looking into accounting methods at some of the largest U.S. companies, broadening the scope of its inquiry beyond the issues in the Enron probe.

4: Microsoft President Rick Belluzzo is stepping down, a move some observers blame on clashes with CEO Steve Ballmer over strategy and management style.

5: Bush raises U.S. stakes in ending Mideast violence, stung by criticism of inaction. "Enough is enough," the president says in announcing Secretary of State Powell will go to the region. Bush calls on Israel to withdraw from areas "occupied" in its current offensive and blasts Arafat for suicide attacks. The U.N. Security Council demands an Israeli pullout "without delay." Israeli troops and tanks enter Nablus.

Four Pakistanis go on trial in Karachi for abduction and murder of The Wall Street Journal's Daniel Pearl.

8: An amended Enron lawsuit alleges that more than three dozen new defendants, including Merrill Lynch and J.P. Morgan Chase, participated in a scheme with the company's top executives to defraud investors.

9: The Andersen partner fired by the firm for shredding Enron audit documents has agreed to plead guilty to obstruction and cooperate with U.S. prosecutors. Separately, Andersen says it will eliminate about 7,000 jobs, or 27% of its work force in the U.S.

Israel announces partial pullout from the West Bank after angry prodding by President Bush. Battles continue to rage, with about 100 Palestinians left dead in a Jenin refugee camp.

10: The SEC widens its probe of alleged accounting fraud at Xerox, telling two former executives and KPMG, the firm's former auditor, that it may file civil charges against them.

11: Andersen's British operations agree to join with Deloitte & Touche. A week earlier, Andersen's Spanish operations also agreed to merge with Deloitte.

15: Venezuela's Chavez returns to power following his ouster by the military last week.

16: GE will cut 7,000 jobs this year in its GE Capital Services unit in an effort to reduce costs and move more functions to the Internet.

In Afghanistan, four U.S. soldiers die when rockets they were disarming blow up near Kandahar.

An Air China 767 jetliner crashes on approach to Pusan, South Korea, killing 129.

18: Ford reports its fourth-straight quarterly loss. But the auto maker joins GM in saying it would boost production, a sign that the industry is beginning to rebound.

H-P says shareholders approved its plan to buy Compaq, by a slim margin. Walter Hewlett vows to continue challenging the results.

TRW rejects Northrop's sweetened $6.68 billion hostile offer and puts itself up for sale.

19: Andersen breaks off settlement talks with the Justice Department aimed at resolving its criminal indictment amid signs its discussions to settle civil litigation are unraveling.

22: Enron President Jeffrey McMahon is stepping down June 1 amid rising government scrutiny of his role in some questionable Enron-related deals.

23: The Treasury plans new federal money-laundering rules that will cover a broader spectrum of the financial-services industry. The rules will apply to credit-card companies, mutual funds, wire-transfer firms and commodities dealers, as well as to banks and securities firms.

Williams Communications files for Chapter 11. Ericsson warns it won't make a profit this year, while Lucent sales plunge 40%, in signs the telecom crash is worsening.

Alfred Taubman of Sotheby's is sentenced to a year and a day in jail and fined $7.5 million for his role in a price-fixing scheme.

24: Exxon Mobil reports that its first-quarter profit tumbled 58% as lower oil and natural-gas prices and lackluster demand combined to create the worst business climate since the 1980s.

25: Suzy Wetlaufer quits the Harvard Business Review as her work continues to be questioned following disclosures of a romantic relationship with GE's ex-chairman.

Andersen lawyer Nancy Temple, a pivotal figure in the document-destruction case, is under criminal investigation.

26: Tyco abandons its plan, announced in January, to split the conglomerate into four parts. The company also lowers its earnings forecast for the year and reports a $1.9 billion quarterly loss because of technology write-downs. Shares tumble 20% to a 52-week low of $20.75.

Dynegy says the SEC is investigating its accounting of natural-gas trading. The news pushes the company's shares down 30%.

29: The economy roars out of recession in the first quarter, growing at a 5.8% annualized pace, the fastest in two years. But signs of fragility linger. Blue chips end the week down 3% at 9910.72, the first time since February the Dow industrials close below 10000, amid bad corporate news.

30: WorldCom's CEO quits. Bernard Ebbers reaches his decision under pressure from outside directors frustrated by the company's sinking stock price, controversy over Ebbers's $366 million personal loan from the firm, and the SEC's investigation of the company.

Sotheby's ex-CEO Diana Brooks is sentenced to three years' probation instead of prison for her role in a price-fixing scheme.

MAY

1: H-P's plan to buy Compaq overcomes a final hurdle as a judge dismisses a lawsuit from dissident shareholder Walter Hewlett that sought to block the deal. After the decision, Hewlett said he would support the $18.6 billion transaction.

2: Enron plans to reorganize itself as a small company under a new name. The mediator in Andersen's settlement talks with Enron creditors and shareholders declares the talks dead.

Israel pulls out of Ramallah, ending Arafat's confinement.

6: France's Chirac wins a second term as president in a landslide driven by distaste for hard-right rival Le Pen.

7: Enron energy traders manipulated California's power system to bolster profits during the height of the state's 2000-2001 energy crisis, documents released by federal regulators show. California officials call for a new criminal inquiry.

8: The Fed leaves rates at a 40-year low and signals it will continue to be patient about raising them, saying the risks of economic weakness and inflation are equally balanced.

A Chinese MD-82 jetliner crashes into the bay near the northeastern city of Dalian, killing all 112 on board. An EgyptAir 737 crashes in Tunisia, killing 14 of the 62 people aboard.

9: The Nasdaq surges 7.8% to 1696.29, sparked by hints from Cisco about a possible business rebound. The Dow industrials jump 3.1% to 10141.83.

KPMG signs a letter of intent to buy nearly all of Andersen Worldwide's consulting operation. The deal is the biggest so far for a piece of Andersen.

10: Worldcom's debt is slashed to "junk" levels by Moody's and Fitch, as the telecom firm's banks asked that it put up collateral to secure $5 billion in credit lines.

IBM plans to lay off as many as 8,000 workers, or about 2.5% of its world-wide work force, during the current quarter.

13: Robert Hanssen is sentenced to life in prison Friday for spying for Moscow over two decades while serving in the FBI.

14: Sears agrees to buy Lands' End, the nation's largest mail-order and Internet apparel retailer, in a $1.86 billion cash deal.

Reliant says it engaged in bogus power trades during the past three years to make its business appear bigger. The company blames rogue traders.

The U.S. and Russia strike a deal to reduce nuclear arsenals. It will require warhead cuts of about two-thirds by 2012, but doesn't lay out a monitoring mechanism and says nothing about missile systems.

Bush signs the farm bill he initially opposed, boosting crop subsidies as well as Republican candidates in agricultural areas.

15: The Justice Department is investigating a group of the world's largest banks for allegedly using their online trading service to restrict competition in the foreign-currency market.

PPG agrees to pay $2.7 billion to resolve all of its asbestos litigation through Pittsburgh Corning's bankruptcy proceedings.

Revamped Iraq sanctions are approved by the U.N. Security Council in a victory for Bush. A ban on arms sales will be toughened while imports of civilian goods will be made easier. Washington hopes that will help it build support for a drive to oust Saddam Hussein.

16: CMS Energy says $4.4 billion of its electricity trading -- most of its volume for 2000 and 2001 -- resulted from sham "round-trip" swaps with Dynegy and Reliant that had no economic value. Meanwhile, the SEC is conducting a sweeping probe across many industries into practices that pump up revenue.

Adelphia says its founder, John Rigas, has resigned and that it has launched a probe amid new allegations involving the Rigas family.

Bush was warned by U.S. intelligence weeks before the Sept. 11 attacks that Osama bin Laden's terrorist network might hijack American planes. The administration notified federal agencies of the threat, but said it lacked specificity to have prevented the tragic events.

17: Japan says it will join the EU in slapping tariffs on U.S. imports of steel, the first time Tokyo has ever retaliated against the U.S. in a trade impasse. Bush's decision in March to impose tariffs on steel imports, coupled with this week's approval of domestic farm subsidies, is spurring retaliation and anti-American trade sentiment.

Adelphia is the subject of a probe by federal prosecutors into possible accounting irregularities.

Reliant and CMS announce management shake-ups, following admissions that they had engaged in bogus power deals.

20: Federal authorities are trying to determine whether Computer Associates wrongly booked more than $500 million in revenue in its 1998 and 1999 fiscal years in a scheme to enrich the firm's senior managers.

Schering-Plough agrees to pay $500 million to resolve manufacturing problems, in the largest penalty ever levied by the FDA.

22: Merrill agrees to pay $100 million and change how it monitors its stock analysts in settling the New York state attorney general's inquiry into allegations that it misled individual investors about the stock of its investment-banking clients.

Citigroup agrees to buy Golden State for $5.8 billion in stock and cash, in a bid to expand its West Coast branch-banking presence.

23: ImClone CEO Samuel Waksal resigns. The biotech firm has been hurt by controversy over its handling of a failed application for its Erbitux cancer drug.

An Alabama jury convicts Bobby Frank Cherry of killing four black girls in the 1963 Birmingham church bombing. The ex-Klansman faces life in prison.

Chandra Levy's remains are discovered in Washington, D.C. The intern had gone missing after an affair with Rep. Gary Condit.

24: J.P. Morgan Chase announces a management shake-up in the aftermath of a series of financial-industry setbacks.

Died: "Slammin' Sam" Snead, 89, golfing legend who won seven major championships, in Hot Springs, Va.

28: CMS's chief resigns following disclosures the energy firm's trading unit had conducted transactions that artificially boosted volumes and revenue.

Taiwan searches for clues to what caused a China Airlines jet to break apart on Saturday and crash into the Taiwan Strait with 225 passengers and crew on board.

Mozambique establishes a commission to investigate what caused a train crash on Saturday that killed about 200 people and injured hundreds. It was the worst rail disaster in the country's history.

29: Dynegy's chief resigns under pressure from the company's board. Chuck Watson's departure comes amid mounting questions about some of the energy concern's financial practices. Glenn Tilton, who joined the board last year as a representative of ChevronTexaco, was named interim chairman. Daniel Dienstbier, a longtime director, was appointed interim CEO.

SBC agrees to pay a record $3.6 million for submitting false data to regulators weighing the firm's long-distance applications.

Halliburton says the SEC launched a preliminary inquiry into its accounting treatment of cost overruns on construction jobs.

Bush signs a historic accord that gives Russia a voice, but no veto, in NATO. Later, the EU says it will formally recognize Russia as a market economy.

30: Philip Morris agrees to sell its Miller unit to South African Breweries in a $3.6 billion stock accord that would let the U.S. firm retain a stake in the beer maker.

Nortel Networks announces plans to cut 3,500 more jobs, or about 8% of its work force, and take charges of $600 million.

31: Analyst Jack Grubman was instrumental in making management and business decisions at Global Crossing for two years after the firm went public in August 1998. The activities of the Salomon telecom analyst may lend support to New York state Attorney General Eliot Spitzer's probe into conflicts of interest among research analysts.

The FBI is given broad new powers on domestic spying. Agents now will be allowed to conduct surveillance of public gatherings and surf the Internet as part of terrorism investigations.

Born: Adam D. Pearl, son of the late Wall Street Journal correspondent Daniel Pearl and his wife, Mariane, in Paris.

JUNE

3: The SEC authorizes investigators to probe the stock sales of Global Crossing's top executives.

4: Tyco announces the resignation of CEO Dennis Kozlowski.

Microsoft agrees to settle SEC civil allegations that the company misstated its earnings during certain periods of the 1990s.

El Paso executive C. Dana Rice is found dead in an apparent suicide, further rattling an energy industry facing growing scrutiny.

Napster files for bankruptcy protection as a prelude to a proposed sale of the Internet music service's assets to Bertelsmann.

5: Bristol-Myers is being sued by state attorneys general, who claim it illegally delayed generic competition to its Taxol cancer drug.

6: New York prosecutors are looking into whether former Tyco's ex-CEO Dennis Kozlowski improperly used company funds to buy his $18 million New York apartment and whether he received interest-free loans from the company to purchase artwork.

Currency trader John Rusnak is indicted on fraud charges in the Allfirst Financial scandal.

Israel moves against Arafat after a bombing kills at least 16 and wounds dozens of others. In response, Israeli tanks enter the Palestinian leader's Ramallah compound and open fire.

7: Adelphia inflated the number of cable-TV subscribers by 400,000 to 500,000 and kept two sets of books to boost the amount it spent to upgrade its systems.

R.J. Reynolds is ordered to pay a $20 million fine after a judge rules it "indirectly targeted" youths in cigarette ads.

10: Adelphia's board dismisses auditor Deloitte & Touche, blaming it for not informing the cable company about questionable accounting and self-dealing.

Instinet plans to buy Island ECN for about $500 million in stock, combining the Nasdaq's two biggest electronic-trading rivals.

12: Bertelsmann is buying the stake in Zomba Music that it doesn't already own for about $3 billion, under a longstanding option being exercised by Zomba's majority owner. The deal comes as the music industry faces its biggest downturn in years.

13: Imclone's former CEO is arrested on charges of trying to sell ImClone stock and tipping off family members after learning that regulators would soon reject his company's cancer drug. Samuel Waksal's arrest creates doubts as to whether Bristol will maintain its current relationship with ImClone.

The SEC reopens a probe of Tyco as part of a broader review of possibly questionable corporate accounting in the aftermath of the Enron meltdown. Separately, Tyco receives SEC clearance for a CIT share offer, but is forced to take a $4.5 billion charge to reflect the unit's impaired value, after which Tyco shares surge 36% on news of the clearance.

14: Heinz says it is spinning off its most sluggish businesses, which will become part of a new unit that will merge with Del Monte.

17: Andersen is convicted of one felony count of obstructing the SEC's investigation into Enron's collapse. The verdict, which the accounting firm plans to appeal, gives the Justice Department a badly needed boost in momentum as it pursues indictments for more-serious crimes at the energy trader.

Qwest CEO Joseph Nacchio resigns at the request of the board, which has become frustrated with the telecom company's woes. Tellabs CEO Richard Notebaert will step in.

18: Nestle is buying a controlling 67% stake in Dreyer's in a bid to compete with Unilever in the U.S. market for premium ice cream.

Enron discloses it made $745 million of payments and stock awards to executives in the year prior to its bankruptcy-law filing.

19: A Senate panel approves legislation creating an accounting-oversight board to set bookkeeping standards, limit consulting work and discipline wayward auditors.

Microsoft says it would restore support for Sun's rival Java software in Windows, offering a concession on the eve of closing arguments at its antitrust trial.

20: The IRS is bringing back its controversial practice of randomly auditing individual tax returns in an effort to crack down on what it says is a growing wave of tax scams. IRS officials say the agency plans to conduct about 50,000 random audits related to the 2001 tax year.

The Justice Department launches a criminal inquiry into whether the top memory-chip makers colluded to prop up prices.

TRW agrees to sell its aeronautical-systems unit to Goodrich for $1.5 billion, a deal aimed at thwarting Northrop's bid for TRW.

24: Three former top Rite Aid executives are charged with masterminding an illegal accounting scheme that triggered the largest corporate-earnings restatement in U.S. history.

A Merrill Lynch sales assistant's statements about a controversial trade of ImClone stock for Martha Stewart contradict what the home-design maven and her broker said about the sale.

Died: Ann Landers, pen name for advice columnist Esther Lederer, 83, Saturday, in Chicago, of cancer.

26: WorldCom's audit panel uncovers what could be one of the largest accounting frauds ever, with the discovery of $3.8 billion in expenses improperly booked as capital expenditures. Without the transfers, WorldCom would have reported a loss for 2001 and the first quarter of 2002. The company fires its longtime chief financial officer, Scott Sullivan.

Adelphia files for bankruptcy-court protection amid probes into some of the largest self-dealing in U.S. corporate history.

Northrop offers to raise its bid for TRW to about $7.2 billion in an effort to fend off rivals.

27: The Fed refuses to cut interest rates or even to signal that the central bank was weighing such a move soon, despite a crisis of confidence intensified by the WorldCom scandal.

The SEC files a civil suit alleging WorldCom engaged in a fraudulent scheme to pad earnings.

Former Tyco chief L. Dennis Kozlowski is charged with two new felony counts of tampering with evidence in connection with an alleged tax-evasion scheme.

28: A new Xerox audit finds that the company improperly accelerated far more revenue during the past five years than the SEC estimated in an April settlement. The total amount of improperly recorded revenue from 1997 through 2001 could be more than $6 billion.

Motorola plans to cut 7,000 more jobs and take $3.5 billion in charges, largely related to the restructuring of its chip-making unit.

JULY

1: Northrop plans to buy TRW for $7.56 billion in stock, a sweetened deal that makes Northrop the No. 2 military contractor and ends a four-month standoff.

Xerox overstated its pretax income by 36%, or $1.41 billion, in the past five years, showing bookkeeping misdeeds more severe than the SEC estimated.

2: Jean-Marie Messier resigns after French directors agreed with their North American counterparts that the Vivendi chief had become the problem. A few days later, Vivendi board chooses Jean-Rene Fourtou as the conglomerate's new chief.

The Nasdaq starts the quarter by skidding 4% and stands just a tad above 1400, a five-year low. Blue chips fall 1.44%.

Two big jets collide over southern Germany, killing 71, including a large group of Russian students flying to Spain for vacation.

The Pentagon dispatches a team to investigate claims that a wedding came under attack in the village of Kakarak, north of Kandahar. A week later, the Pentagon issues a statement acknowledging a U.S. airstrike killed an undetermined number of Afghan civilians.

3: Prosecutors secure Cynthia Cooper, the internal auditor who uncovered WorldCom's alleged accounting fraud. Her account of events is said to conflict with that of WorldCom.

A day after Nasdaq's dive, the S&P 500 follows suit, falling over 2% to a four-year low. The Nasdaq slides 3.28%.

5: The Justice Department begins a criminal probe into Qwest, the latest blow for a telecom firm struggling with $26.6 billion in debt and steep declines in local and long-distance businesses.

A nation trying to put Independence Day anxiety aside is jolted by TV bulletins of shootings at the El Al counter at Los Angeles airport. Three died, including the gunman. Officials rush to say the incident doesn't look like terrorism. Soon after, a small plane crashes among picnickers at a Los Angeles-area park, killing three. Again, terrorism isn't suspected.

9: The president is forced to defend his SEC chairman, as calls for Pitt's ouster grow, and is questioned closely about his own business dealings while a director of Harken Energy. Bush dismisses as "recycled stuff" questions about a 1990 stock sale he made just before the company reported a loss.

10: Merck postpones its Medco IPO but says it hopes to complete the separation of the pharmacy-benefits unit within 12 months.

11: Cheney and Halliburton are sued by a legal watchdog group on behalf of shareholders. Judicial Watch alleges fraudulent accounting practices occurred when the vice president ran the oil-services firm.

12: Bristol-Myers confirms the SEC is probing whether the drug maker improperly inflated revenue last year by up to $1 billion.

15: Pfizer agrees to buy Pharmacia for $60 billion, giving the world's biggest drug company full rights to the arthritis treatment Celebrex.

Coke will begin to treat stock options as an expense, which may prompt other businesses to debate adopting the practice.

Fannie Mae and Freddie Mac agree for the first time to submit to securities regulators' scrutiny, in a bid to silence critics.

FleetBoston decides to shut its Robertson Stephens investment bank, after negotiations with a management-led team hoping to buy the firm failed.

A Pakistani judge convicts four men of kidnapping and killing Wall Street Journal reporter Daniel Pearl.

16: John Walker Lindh pleads guilty under a surprise deal. In the plea bargain approved by Bush, the so-called American Taliban agrees to serve 20 years in prison for fighting in Afghanistan.

17: Ron Sommer steps down as CEO of Deutsche Telekom, yielding to pressure from German leaders who wanted the executive out before national elections.

Intel misses Wall Street estimates for second-quarter earnings and says it will cut its work force by 4,000, or about 5%.

Bush unveils his national strategy for homeland security. The proposal calls for a systematic inventory of the nation's critical infrastructure and a secret plan to protect such sites from terrorist attack. The plan to create a cabinet-level department is unnerving many cabinet officials and agency heads, who are seeing their turf eroded.

18: Salomon regularly doled out shares of hot IPOs to CEOs in a bid to win investment-banking business, a lawsuit alleges.

Ford reports its first profit in a year, but the company said it must improve on the slow progress of its cost-cutting efforts.

AT&T names President David Dorman as chairman and CEO-designate in another step toward completing its restructuring.

19: AOL Time Warner puts two veterans from the old-media side in charge of day-to-day operations as Robert Pittman resigns. Questions about revenue recognition hurt the firm's stock price.

22: The Dow industrials saw their worst two-week drop since the 1987 crash, falling 390.23 points to 8019.26 on Friday. That day's volume of 2.63 billion shares traded was the biggest ever on the Big Board. More than $1.41 trillion in value has been erased from U.S. stocks in those weeks as measured by the Wilshire 5000.

WorldCom files for Chapter 11 in the largest bankruptcy case in U.S. history. The firm plans to restructure its $41 billion in debt, sell nonessential assets and focus on key businesses.

The industrial average slides 2.93% to 7784.58, its lowest level since October 1998, in the fourth-heaviest trading day ever on the Big Board. The S&P 500 plunges 3.29% to 819.85, while the Nasdaq composite closes down 2.77% at 1282.65.

23: An Israeli air force F-16 fires a missile at a Gaza City house, slaying the top commander of Hamas's military wing. The F-16's bomb also leaves 14 civilians dead, nine of them children, enraging Palestinians. At least 145 Palestinians were injured in the strike. The White House chastises Israel for the high civilian toll, calling the operation "heavy-handed."

24: Dynegy shares plunge 64% after the energy-trading company cancels a bond offering and slashes its 2002 cash-flow forecast. S&P cuts Williams Cos.' debt rating to junk status, citing the energy concern's liquidity problems and tumbling share price.

The industrial average falls 1.06% to 7702.34 in late selling. The Nasdaq plunges 4.18% to 1229.05, its biggest one-day loss of the year.

25: The industrial average surges 488.95 points, or 6.4%, its biggest one-day percentage rally since the aftermath of the crash of 1987. Big Board volume is 2.77 billion shares, a record.

Hershey's controlling trust is exploring a sale of the candy and chocolate maker, in an auction that could fetch about $11 billion.

Adelphia founder John Rigas and two of his sons are arrested and charged with looting the cable-television company.

The House expels Rep. Traficant, 420-1, over his bribery and racketeering conviction. The Ohio Democrat is only the second member to be ejected since the Civil War. Rep. Condit casts the lone vote of "nay."

26: Taiwan Semiconductor issues a bearish second-half outlook, causing many U.S. tech stocks to plunge. The firm is cutting spending due to weak chip demand.

Tyco names Motorola President Edward Breen as its new chairman and CEO. Motorola chooses Mike Zafirovski to succeed him.

Microsoft says it plans to spend heavily on new initiatives this fiscal year and hire about 5,000 employees, a 10% increase in staff.

29: Bertelsmann CEO Thomas Middelhoff quits the German company under pressure from controlling shareholders.

GE Chairman Jeffrey R. Immelt is dividing GE Capital into four separate businesses. The restructuring will give him greater control amid pressure to simplify financial disclosure.

Qwest says it expects to restate financial results for 2000 and 2001 and to withdraw previously reduced financial projections for 2002.

Nine Pennsylvania miners are rescued after being trapped in a flooded coal shaft for 77 hours. The men tied themselves together, deciding to live or die as a group, as drillers worked through the weekend to reach them.

Lance Armstrong won bicycling's Tour de France Sunday for the fourth year in a row, a record for an American.

30: The industrial average surges 447.49 points, or 5.41%, to 8711.88, capping the most powerful four-day rally since 1933. Despite the gains, the Dow Jones industrials are down almost 26% from their record high of 11723 in January 2000, and few investors are prepared to say that the bear market is over.

31: IBM agrees to pay $3.5 billion in cash and stock for the consulting arm of PricewaterhouseCoopers. The purchase would extend the reach of IBM's computer-services operation, which is already the world's largest and IBM's biggest business.

Bush signs a bill to fight corporate fraud. At an elaborate ceremony to give his approval to legislation he initially resisted, the president promises "no more easy money for corporate criminals, just hard time."

Sen. Torricelli (D., N.J.) is admonished by the Senate Ethics panel for taking gifts from a campaign donor.

AUGUST

1: A bomb explodes in a Hebrew University cafeteria in Israel, killing five Americans and four Israelis. Hamas claims responsibility, and Israeli forces later in the month arrest five people for suspected involvement.

Williams Cos. reaches preliminary pacts for about $2 billion in secured debt from its banks and Berkshire Hathaway, and discloses plans to sell more than $1 billion in assets.

GE says it will treat employee stock options as an expense, making it one of the largest companies to adopt the accounting practice, although it soon expresses concern about valuing them correctly. Other big companies to follow suit include Procter & Gamble and AIG.

2: The Senate, 64-34, passes the "fast track" trade-authority bill, giving President Bush enhanced power to negotiate trade deals.

Stanley Works drops its plan to reincorporate in Bermuda in response to mounting pressure from Congress. The tool maker's planned move had drawn criticism as a symbol of corporations' attempts to avoid taxes.

Tyco says its chief financial officer will leave, a sign that new CEO Edward Breen is starting to clean house at the company.

8: The IMF agrees to provide Brazil with a $30 billion rescue package, a move aimed at restoring investor confidence and forestalling a possible debt default in advance of October presidential elections.

ImClone's Samuel Waksal is indicted for insider trading; he pleads not guilty. ImClone soon files suit against its founder and former CEO, alleging he deliberately impeded continuing probes of the biotech firm.

9: WorldCom expects to expand its planned financial restatement to $7.2 billion from $3.85 billion as a result of additional accounting irregularities.

The Dow Jones industrials jump 3%, or 255.87 points, to 8712.02, capping a three-day surge of 8%, the biggest since 1987.

12: US Airways files for bankruptcy-court protection, punctuating the impact of the Sept. 11 attacks on the travel industry. The move shields the nation's No. 7 airline from creditors as it works to complete a restructuring plan.

13: American Airlines plans a sweeping overhaul and broad layoffs as it struggles to stem losses. The carrier expects to ground more jets and change the way it connects passengers -- a step entailing longer waits at hub airports.

The Pentagon says a U.S. soldier died of wounds he received two weeks earlier in Afghanistan in an attack against the country's army on the outskirts of Kabul, reportedly led by Pakistani members of al Qaeda who had just escaped detention in the capital.

14: The Federal Reserve leaves its target for short-term rates unchanged at 1.75%. The Dow Jones industrials fall 2.4%, or 206.50, to 8482.39 amid investor disappointment, and bonds rally, pushing Treasury yields to their lowest level since the 1960s.

Amtrak is forced to suspend most high-speed Acela service after cracks were found in locomotive wheel brackets. Shortly thereafter, the rail carrier halts all Acela trains on the discovery of more problems with the antisway brackets. The move cuts total service on the busy Northeast corridor by about a third.

15: Top executives from hundreds of companies scrambled to meet an Aug. 14 SEC deadline to swear that their financial results are accurate. But several companies identify accounting problems, and Enron officials aren't able to certify results for 2000 or the first three quarters of 2001.

Conseco reports a huge loss after a $2.95 billion goodwill write-down, effectively eliminating most of the firm's shareholder equity.

16: Jack Grubman resigns from Salomon Smith Barney. The telecommunications analyst had faced mounting pressure from regulators, who say he hyped stocks to help the firm win investment-banking deals. The move comes as Salomon faces an NASD inquiry into whether it directed shares of hot initial public offerings into clients' personal-brokerage accounts at below-market prices. Salomon later acknowledges that it directed thousands of shares of hot IPOs to executives of WorldCom. Nearly one million shares of those IPOs went to Bernard Ebbers, WorldCom's ex-CEO, documents show.

20: Qwest agrees to sell its yellow-pages business to a consortium led by Carlyle Group and Welsh Carson for more than $7 billion.

21: The SEC formally concludes that telecom companies acted improperly in booking revenue from capacity swaps with other firms.

22: Former Enron executive Michael Kopper names Andrew Fastow, Enron's ousted chief financial officer, as an unindicted co-conspirator as he pleads guilty to money laundering and fraud. The former aide to Fastow was a key player in several off-balance-sheet partnerships. His plea agreement is the first by an ex-Enron executive.

Martha Stewart is sued by a shareholder, who claims Stewart sold company shares on knowledge of an insider-trading probe.

David Westerfield, 50, is convicted of kidnapping and killing his 7-year-old neighbor, Danielle van Dam. The San Diego case was the first in a series of high-profile child abductions during the year. In September, the trial jury recommends the death penalty, but a delay pushes sentencing into 2003.

23: Salomon Smith Barney is being investigated by New York's attorney general over how the securities firm won a lucrative deal from AT&T and what role Citigroup CEO Sanford Weill may have played. Salomon was picked as lead underwriter for the April 2000 stock offering only after telecom analyst Jack Grubman upgraded his rating on AT&T to a "buy."

28: The SEC approves rules requiring top executives of U.S. and foreign companies, including mutual-fund firms, to certify results they file with the agency.

29: Prosecutors win an indictment against Scott Sullivan, WorldCom's former top finance executive, accusing him of orchestrating the telecom firm's $7.2 billion fraud. The federal grand jury also indicts Buford "Buddy" Yates, a midlevel accounting official. The two are charged with securities fraud and making false filings to the SEC.

Grand juries charge six men with plotting to aid al Qaeda. In Seattle, American Muslim activist James Ujaama is accused of trying to set up a "jihad training camp." Five men who had been in the U.S. since 2000 are indicted in Detroit for allegedly running a "sleeper cell" for a group allied with al Qaeda.

30: Kennedy cousin Michael Skakel is sentenced to 20 years to life in prison for the 1975 murder of Connecticut neighbor Martha Moxley.

SEPTEMBER

3: UAL's board names oil-industry veteran Glenn F. Tilton as chairman, CEO and president.

Died: Lionel Hampton, 94, vibraphonist who served as a beloved jazz ambassador, in New York.

4: Stocks plunge world-wide, hurt by weak manufacturing figures in the U.S. and Europe and talk of more problems among Japanese banks. The Dow Jones industrials slide 355.45 points, or 4.1%, to 8308.05, their second-sharpest drop of the year. In Tokyo, stocks tumble 3.2% to a 19-year low. The yield on the 10-year Treasury falls below 4% for the first time in nearly 40 years.

5: Credit Suisse First Boston's Frank Quattrone pushed for greater IPO allocations for investment-banking clients, according to e-mail records and people familiar with the firm. The allegations against the star technology-industry investment banker thrust Credit Suisse Group's CSFB into the spotlight of regulatory scrutiny regarding IPO-allocations practices. It soon emerges that CSFB analysts felt pressured by the firm to avoid writing negative reports on investment-banking clients, according to evidence in a Massachusetts probe.

6: The Senate votes 87-6 to let airline pilots carry guns. The House already had voted in favor of the move.

9: Saudi Arabia won't open its most promising natural-gas fields to Western oil firms, all but ending their plan to invest $25 billion amid a historic reopening of the kingdom's petroleum sector. Riyadh-Washington relations have been under rising tension in the wake of the Sept. 11 attacks, Israeli-Palestinian violence and U.S. talk of unseating Saddam Hussein.

Citigroup ousts Michael Carpenter as head of its global corporate and investment bank amid allegations of questionable practices at its Salomon unit.

Pete Sampras beat Andre Agassi over the weekend in four sets to win the U.S. Open, his 14th major tennis title. Among women, Serena Williams won over sister Venus in straight sets.

11: Qwest withdraws applications to provide long-distance telephone service to customers in nine states. The Baby Bell faced almost certain rejection by the FCC due to concerns about the company's accounting scandal. Qwest says it plans to refile the applications after updating the financial statements of its long-distance affiliate and putting new controls in place.

WorldCom's board plans a search for a new CEO; John Sidgmore has said he wants to relinquish the role.

12: The U.S. marks the one-year anniversary of the Sept. 11 terrorist attacks. Bush visits all three sites of the attacks; the reading of names of those lost at the World Trade Center takes 2 1/2 hours.

Died: Johnny Unitas, 69, quarterback who shattered records and won three championships for the Baltimore Colts in a long career ending in 1973, in Baltimore of a heart attack.

13: Tyco's former CEO and ex-finance chief are charged with stealing over $170 million. Prosecutors accuse Dennis Kozlowski and Mark Swartz of running a "criminal enterprise" aimed at defrauding investors, saying the executives siphoned off company funds for their own use. Mark Belnick, the former general counsel, is charged with falsifying business records.

Bush challenges the United Nations to act to enforce its resolutions on Iraq. Citing a "grave and gathering danger," the president commits himself to seeking international support while warning the U.S. will act on its own against Saddam Hussein if necessary.

16: Prosecutors are investigating alleged fraud by Enron in the manipulation of power prices in three Western states during the California electricity crisis. They are examining whether two former top executives, Jeffrey Skilling and Greg Whalley, were aware of the questionable trading practices or sought to conceal them.

Pakistani authorities say they caught the first member of a three-man execution team that allegedly killed Wall Street Journal reporter Daniel Pearl. The arrest comes in a recent sweep in Karachi that also netted a Yemeni man who U.S. investigators believe was a key plotter of the Sept. 11 attacks. Meanwhile, federal authorities report the arrests of five men from the Buffalo, N.Y., area who allegedly trained at an al Qaeda-run terrorist camp in Afghanistan, and a sixth man is soon reported to have been picked up in Bahrain.

18: Hershey is taken off the auction block just as the charitable trust that controls it was close to wrapping up a sale to Wrigley for $12.5 billion, a price far higher than had been expected. The push to sell the nation's largest candy maker was against the initial wishes of the company's senior management and prompted a firestorm of protest.

19: WorldCom prepares a further revision of its financial results that could add about $2 billion to the $7 billion in accounting problems it has already disclosed. The move marks the second time the long-distance firm has added large amounts to its earnings revision.

Merrill fires Thomas Davis, one of two vice chairmen, for his refusal to testify in an investigation of several Enron deals.

Rosie O'Donnell scuttles her Rosie magazine joint venture with Bertelsmann's Gruner + Jahr.

20: Dennis Kozlowski's ex-wife agrees to post $10 million in cash as security for the former Tyco chief executive's bail bond.

Citigroup agrees to pay $215 million to settle FTC allegations that Associates First Capital engaged in deceptive and abusive lending.

24: Xerox is facing a criminal inquiry by federal authorities related to the copier company's massive misstatement of earnings. FBI agents and prosecutors recently have questioned James Bingham, a former assistant treasurer, who has said he was fired for trying to rein in unethical accounting.

Salomon agrees to pay $5 million to settle civil charges levied by the NASD that analysts touted Winstar, while privately questioning the stock. Winstar, a telecom company, filed for bankruptcy-court protection in 2001.

Adelphia founder John Rigas, two of his sons and two other former executives are indicted on charges of looting the firm.

25: The Fed votes to hold interest rates steady at 1.75%, sending the Dow Jones industrials tumbling 189.02 points, or 2.4%, to a four-year low of 7683.13

Dynegy agrees to pay a $3 million fine to settle an SEC complaint that it artificially inflated results it reported to investors.

26: Merrill employee Douglas Faneuil agrees to plead guilty to a misdemeanor charge and provide testimony against Martha Stewart and others over their sales of ImClone stock in 2001.

27: WorldCom's ex-controller, David Myers, pleads guilty to fraud, saying he manipulated accounts at the behest of management.

30: West Coast port employers close docks as contract talks stall after a work slowdown disrupts port operations.

New York prosecutors are examining whether Tyco's outside auditor, PricewaterhouseCoopers, knew about secret bonuses paid to former Tyco executives and accounting that regulators say hid the payments. Meanwhile, investigators are probing whether a secret $40 million payment that Tyco made to settle a lawsuit in 2000 represented a payoff to conceal possible auditing improprieties.

Citigroup offers to create a separate research arm as part of a global settlement with regulators probing allegations of stock hyping at its Salomon unit.

OCTOBER

1: Torricelli bows out of his New Jersey Senate race, pressed by Democratic elders who feared that his flagging campaign, dogged by ethics questions, could cost the party the Senate.

New York Attorney General Eliot Spitzer sues five telecom executives, demanding that they return to investors the $1.5 billion that the suit says was obtained from the sale of stock in their own firms and $28 million in profits from the sale of Salomon IPOs.

2: Global Crossing's chairman pledges to contribute $25 million to offset some of the pension-fund losses sustained by employees.

New Jersey Democrats pick ex-Sen. Lautenberg to fill the vacancy left by Torricelli's withdrawal.

3: Congressional investigators find that Goldman allocated hot IPO shares to top executives at 21 U.S. companies, taking in lucrative investment-banking fees from those firms in the late.

4: Conseco's Gary Wendt abruptly steps down as CEO but says he will remain chairman.

Martha Stewart resigns from the board of the NYSE, intensifying questions about her future at the company she founded.

7: Sniper attacks continue around Washington, D.C., after five people were killed in Maryland suburbs. Charles Moose, the Montgomery County police chief, was the foremost face in the sniper hunt. Over the following weeks, a total of 10 people are killed and three are wounded.

9: A judge grants Bush's request for a court order to reopen West Coast ports, the first time a president has invoked the Taft-Hartley Act in 24 years. The White House cites economic damage and the war on terrorism as reasons for the move.

11: Congress approves a war resolution empowering Bush to attack Iraq if efforts to get the U.N. to force disarmament fail. The Democratic-led Senate approved the measure 77-23, following earlier House approval.

The FCC rejects an $18 billion merger of satellite-TV companies EchoStar and Hughes, citing harm to consumers.

Two ex-WorldCom employees plead guilty for their role in the $7.2 billion accounting fraud.

Died: Bernard H. Ridder, 85, newspaper publisher who helped to engineer the 1974 Knight Ridder merger, in San Mateo, Calif., after a stroke.

14: Lucent says it will cut 10,000 jobs and take a $4 billion restructuring charge, raising new concerns about long-term liquidity.

A weekend bombing at a tourist nightspot in Bali leaves more than 190 dead, deepening fears about a fresh terrorism surge. The Indonesia bombing took place on the second anniversary of the USS Cole bombing in Yemen.

Died: Stephen Ambrose, 66, popular historian, mainly of World War II, in Bay St. Louis, Miss., of cancer.

16: Samuel Waksal pleads guilty to insider trading and other charges.

Motorola turns in its first positive quarterly results since the fourth quarter of 2000 but fails to meet revenue forecasts.

17: Congress signs off on the $355.1 billion Pentagon spending bill and sent Bush the $3.87 billion election-overhaul bill as lawmakers rushed to get home and campaign.

Dynegy plans to leave the energy-trading business and says its president resigned.

North Korea has told the U.S. it has a secret nuclear-weapons program in violation of a deal with the Clinton administration to halt such efforts in exchange for a civilian nuclear plant, U.S. officials said. The admission came during an early October visit by a U.S. envoy.

18: The Vatican rejects parts of the U.S. Catholic Church's new policy on clerical sex abuse, saying they would violate the due-process rights of accused priests.

The former head of Enron's Western energy-trading desk admits he conspired to manipulate California's electricity market to maximize profits.

21: Irish voters approve EU expansion 63% to 37%, reversing a 2001 rejection that had stymied Eastern European hopes. Ten more nations are set to join the EU by 2004.

Dynegy fires six people and disciplines seven others on its natural-gas trading desk for allegedly giving false data to publishers.

22: A burial box from 63 A.D. may be the earliest known artifact linked to Jesus, a French expert says. Others aren't sure. An inscription says the apostle James was Christ's brother.

23: The New York Times says it will buy the Washington Post's 50% stake in the International Herald Tribune, ending a longtime partnership.

Pfizer receives a patent covering the way Viagra works to treat impotence and files suits to block competing products.

24: AOL Time Warner says it will restate its financial results for the past two years because of more questionable advertising transactions at America Online. The restatement will reduce revenue by $190 million and is likely to deepen uncertainty about accounting issues.

Chechen rebels seize as many as 700 people at a Moscow theater, demanding an end to Russian army operations in the breakaway republic. Days later, gas based on fentanyl, a narcotic painkiller, is used by Russia to end the siege but it kills more hostages than Chechen gunfire. Russian prosecutors later put the death toll at 128 hostages and 41 Chechen rebels.

25: Eliot Spitzer and the SEC unveil a plan for a panel to oversee independent stock research that brokerage firms would be required to provide to individuals.

Bristol-Myers says it will restate sales and earnings for at least the past two years due to a wholesale inventory-stocking issue.

Ballistics tests show the sniper has been caught, police said. The ATF matched a military-style rifle found in the car of John Allen Muhammad, 41, and John Lee Malvo, 17, to 11 of the 13 Washington-area shootings that began Oct. 2. An Alabama homicide, mentioned in a call to police, yielded a print that broke the case.

28: EchoStar moves to revive its $18 billion bid to take over rival satellite-television broadcaster Hughes Electronics, agreeing to help turn a third company, Cablevision Systems, into a viable competitor.

William Webster, who served as director of the FBI and CIA, is chosen to head the SEC's new accounting-oversight board.

Carnival wins a lengthy battle to acquire P&O Princess as the smaller cruise line abandons a deal with Royal Caribbean.

The Anaheim Angels defeated the San Francisco Giants 4-1 on Sunday to win a World Series that went seven games. It is the lowest-rated series and one of the least watched in history.

Died: Paul Wellstone, 58, liberal Minnesota Democratic senator Friday in a plane crash that also kills his wife, daughter and five others.

30: Citigroup plans to break out its research and retail-brokerage operations into a new unit, amid pressure on the firm from regulators to tackle stock-analyst conflicts. Sanford C. Bernstein CEO Sallie Krawcheck is later named to run the new unit.

French prosecutors launch a criminal probe of Vivendi's financial disclosures under its ex-chairman, Jean-Marie Messier.

Arafat wins approval for his cabinet, a roster of old faces, after a protracted struggle with Palestinian leaders demanding political changes and safeguards against graft.

31: Mondale takes the late Sen. Wellstone's place on Minnesota's ballot.

NOVEMBER

1: Antitrust enforcers sue to block EchoStar's $18 billion deal for rival satellite-TV firm Hughes, saying it would hurt consumers.

Enron ex-official Andrew Fastow is indicted for fraud, conspiracy, money-laundering and coercing his lieutenant to destroy documents.

Tenet shares fall 26% on news of a probe into whether two doctors at one of its hospitals performed unnecessary procedures. Tenet responds by hiring an outside medical auditor to investigate. The federal government later says it will conduct an audit to see whether certain Medicare payments to the company were proper.

The Dow Jones Industrial Average ends the month with a 10.6% gain, the second-best October ever.

4: Microsoft wins a sweeping victory, as a federal judge upholds the software company's antitrust settlement.

5: U.S. forces kill a top bin Laden aide and five others in Yemen. The missile that hit Qaed Salim Sunian al-Harethi's car was fired from an unmanned aircraft, the first such attack outside Afghanistan. The U.S. later discloses that a Yemeni-American was among those killed. Ahmed Hijazi, a U.S. official said, had ties to alleged members of an al Qaeda cell in Buffalo, N.Y.

6: Harvey Pitt quits as SEC chairman amid controversy over his appointment of William Webster to head the accounting-oversight board.

WorldCom discloses that its false profits could top $9 billion. The SEC slapped the firm with more fraud charges and said the deception goes back to 1999.

Prices of consumer goods are falling for the first time since 1960, leading policy makers to worry about the prospect of deflation.

Tuesday's elections produced a Senate of 51 Republicans, 47 Democrats, one independent, and one seat to be decided in a runoff. Republicans were able to hold onto their majority in the House. In December, Sen. Mary Landrieu of Louisiana boosts Democrats' seats to 48 as she wins a runoff against Republican Suzanne Haik Terrell.

7: The Fed slashes interest rates by an unexpectedly large half-a-percentage point to 1.25%.

Gephardt says he will quit as House leader.

11: The SEC's top accountant quits, increasing pressure on William Webster to withdraw as head of the accounting-oversight board.

13: Jack Grubman indicates Citigroup CEO Sanford Weill pushed him to upgrade AT&T's stock rating as part of Weill's power struggle with Citigroup's former co-chairman, John Reed.

William Webster quits as chairman of the new accounting-oversight board, creating more turmoil in federal securities regulation.

14: Visa and MasterCard undertook a decade-long campaign to discourage the use of rival debit cards, according to documents unsealed in an antitrust suit brought by retailers.

15: Williams colluded with partner AES to drive up power prices during the California electricity crisis, a report released by FERC indicates.

Britain's HSBC agrees to buy Household International in a deal valued at $16.15 billion.

The FCC frees major wireless carriers of their obligation to pay about $16 billion they had bid for NextWave licenses.

House Democrats choose Nancy Pelosi of California as their new leader and Cuban-American Robert Menendez of New Jersey as caucus chairman, the highest posts ever held in Congress by a woman and a Hispanic. Pelosi, who set a goal of crafting a "down the center" program for economic growth, is challenged to revive a party stunned by election setbacks.

18: Michael D. Capellas officially is named WorldCom's president, chairman and chief executive.

The industrial average posts a sixth consecutive week of gains, rising to 8579.09.

19: CA's Charles Wang steps down as the software company's chairman and a board member. Computer Associates has come under scrutiny by federal investigators probing its accounting practices. CEO Sanjay Kumar is named to succeed Wang, the company's founder.

National Century files for bankruptcy protection, as a federal probe continued into the health-care-industry financier.

Osama bin Laden is alive, U.S. officials conclude after technicians confirm an audio tape given to al-Jazeera TV last week is genuine.

20: The Senate passes the Homeland Security bill on Bush's terms.

Iraq pledges to divulge by Dec. 8 all data on weapons of mass destruction.

A crippled oil tanker splits in two and sinks off northwest Spain, days after several countries, fearful for their coasts, refused to allow the leaking vessel to dock for repairs.

22: A top al Qaeda operative was captured this month and is under U.S. interrogation, Washington says. Abd al-Rahim al-Nashiri, a Saudi, is believed to have coordinated the 2000 bombing of the USS Cole and been involved in the 1998 Africa embassy bombings. Indonesian police arrest an alleged mastermind of the Bali bombings that killed nearly 200 in October. He is Imam Samudra, an Afghanistan-trained leader of the al Qaeda-tied Jemaah Islamiyah organization.

25: West Coast dock employers and the dockworkers union reach a tentative six-year contract accord over the weekend.

The French government sells its 10.9% stake in Credit Lyonnais to BNP Paribas for $2.19 billion, in a surprise move.

France Telecom agrees to a $7.58 billion bailout of Mobilcom after a fruitless venture in Germany's wireless market.

26: The SEC files its first enforcement actions under Regulation FD, the rule adopted in 2000 to prevent selective disclosure of market-moving news. The commission announces cease-and-desist orders against Raytheon and its finance chief and Secure Computing and its CEO, and fines Siebel Systems $250,000.

Authorities arrest three men in what they said was the biggest U.S. identity-theft case ever. The credit reports of more than 30,000 Americans were stolen and sold.

Bush signs the bill creating a Homeland Security Department and says he will put antiterrorism adviser Ridge in charge of it.

27: Four Russian oil companies plan to build a $1.5 billion Arctic port that could eventually supply up to 10% of U.S. crude imports.

29: UAL takes a blow in its struggle to avoid filing for bankruptcy-court protection when United Airlines' mechanics vote to reject pay cuts vital to the carrier's request for government financial aid. Nonunion salaried employees had earlier agreed to contribute $1.3 billion in wage concessions and productivity improvements.

Suicide bombers kill at least 12 at an Israeli-owned resort hotel in Mombasa, Kenya, and two shoulder-fired missiles narrowly miss an Israel-bound 757 jetliner as it takes off from the city's airport with 261 aboard. In Israel, two Palestinian gunmen kill six Israelis at a Likud polling station in the northern town of Beit Shean.

DECEMBER

6: Venezuela's President Hugo Chavez vows to use the military to keep oil flowing despite a general strike against his rule. But the action lasts for weeks, paralyzing the country's oil industry and pushing crude-oil prices to a two-year high of more than $33 a barrel.

Died: Roone Arledge, 71, pathbreaking TV news and sports executive at ABC, in New York, Thursday of cancer.

9: The U.N. begins digesting the reams of documents Iraq submitted in compliance with a Dec. 8 deadline for an arms declaration. Iraq maintains that it has no weapons of mass destruction. Bush later condemns the disclosure as full of omissions, and Powell says Iraq is in "material breach" of the U.N. resolution, as the 12,000-page declaration "totally fails" to meet requirements and is riddled with deception. But he stops short of threatening war.

10: Bush chooses John Snow, chief executive of railroad company CSX, to be the secretary of the Treasury. The nomination follows a shake-up in the White House's economic team late the prior week, in which Paul O'Neill and Lawrence Lindsay abruptly resigned as Treasury chief and head of the White House's National Economic Council, respectively. Bush later names Stephen Friedman, a former Goldman Sachs chairman, to lead the economic council.

United Air parent UAL files for bankruptcy-court protection. The move comes shortly after United's request for a $1.8 billion loan guarantee is rejected by the government.

Senate leader Trent Lott begins a litany of apologies for remarks on Sen. Strom Thurmond's 100th birthday that seemed to indicate approval of the segregationist platform of Thurmond's 1948 presidential bid. The comments ignite a media furor and a political firestorm, including rebuke from Bush and calls for the Mississippi Republican to step down as the party leader in the Senate.

11: Bush nominates veteran investment banker William Donaldson to head the SEC, a move aimed at reassuring investors and lawmakers after a year of business scandal.

EchoStar abandons its $18 billion bid to buy Hughes, making News Corp. the likely front-runner for the satellite-TV firm.

16: Credit Agricole agrees to acquire Credit Lyonnais in a deal that values Credit Lyonnais at about $19.94 billion in cash and stock. The French banks' proposed pact is a setback for BNP Paribas, France's largest bank, which last month bought a 16.3% stake in Credit Lyonnais.

17: Bush names ex-New Jersey Gov. Tom Kean to head the Sept. 11 commission investigating intelligence failures, following ex-Secretary of State Kissinger's withdrawal.

18: McDonald's warns that the company expects to report its first quarterly loss since going public 37 years ago, the result of taking $390 million in charges.

Bush orders a rudimentary missile shield deployed in two years. The land- and sea-based system is expected to push annual spending on the program to $9.5 billion for fiscal 2004 and 2005 from $8 billion for 2003.

19: Allianz CEO Henning Schulte-Noelle quits, following a record $2.57 billion third-quarter loss on insurance losses and the acquisition of Dresdner Bank. The German company names Michael Diekmann to succeed him.

A California judge threw out a $28 billion punitive-damage award against Philip Morris, reducing the judgment to $28 million.

20: Gold prices climb to their highest level since 1997, boosted by concerns about Iraq, firm oil prices and weak stock markets.

23: A stock-research settlement unveiled by regulators requires 10 firms to pay $1.4 billion, including $900 million in penalties, $450 million for independent research over the next five years and $85 million for investor education.

The U.S. urges North Korea to replace U.N. surveillance equipment it dismantled at a nuclear reactor. But Pyongyang continues its moves toward restarting the nuclear plant that the communist regime claims will generate electricity, but that experts say can produce weapons-grade plutonium. The ensuing standoff ignites new security concerns.

24: Sun Microsystems wins a big victory as a federal judge orders Microsoft to distribute Sun's Java programming technology with the Windows operating system.

Senate Republicans elect Tennessee heart surgeon Bill Frist as majority leader in the wake of Trent Lott's resignation late the prior week.

30: U.N. inspectors, at North Korea's insistence, prepare to leave the country after Pyongyang declares a 1994 agreement void and begins refueling a Yongbyon reactor suspected of producing plutonium for bombs.

31: A Tyco internal inquiry finds "a pattern of aggressive accounting" intended to inflate its reported earnings, but the problems weren't large enough to be "material" to the company's overall profit.

Global Crossing founder and Chairman Gary Winnick resigns after getting bankruptcy-court approval for a reorganization plan.

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