Fifty money managers ranging from Warren Buffett to Carl Icahn have used exemptions from the SEC to avoid disclosing large investments in companies this year, affecting 154 quarterly filings, the WSJ reports. While the SEC usually requires that managers owning more than $100m disclose acquired stakes in quarterly filings, this can be waived if the disclosure would cause “substantial harm” to their competitiveness. Other investors argue that the SEC is not doing enough to explain why it gives the exemptions. Warren Buffett’s recent disclosure of a $10.7bn stake in IBM has reignited debate over the practice. Read more
Agencies who investigated MF Global before its collapse will give different accounts of when they first became concerned about its trades, when they appear before a Congressional hearing later on Thursday, the FT reports. Terry Duffy, chief executive of CME Group, said that MF Global seemed to be in “full compliance” with segregating its customers’ funds until the day before its collapse, only for CME and CFTC auditors to be told on 2am on the day the broker filed for bankruptcy that some funds had been transferred. The CBOE said it was receiving data from the broker in August, while Finra said it had been watching MF Global’s trades in euro sovereign debt since May. A”turf war” may meanwhile be opening between Chicago and New York prosecutors on bringing criminal charges over the collapse, Reuters says. Read more
President Barack Obama will lend his weight to the nomination fight for Richard Cordray to head the Consumer Financial Protection Bureau, in advance of a Senate vote this week, Bloomberg reports. Without a full director, the CFPB’s ability to regulate non-banks, including pay-day lenders, is limited. The campaign to induce Senate Republicans to accept Cordray, former attorney-general of Ohio, will also bolster the White House’s push to present the president as an economic populist ahead of the 2012 election, Reuters says. Newt Gingrich’s rise to the top of the Republican presidential race has benefited from his insistence to voters that he will be the “paycheck president” to Obama the “food-stamp president”, notes the Economist. Read more
Teams of global regulators will fan out across the world from next year to ensure that new tougher capital and liquidity standards are enforced correctly, the chairman of the Basel Committee on Banking Supervision said on Wednesday, the FT reports. “The financial crisis resulted in a bold response by the committee,” Stefan Ingves told an audience of North and South American banking supervisors in San Francisco. “However, these efforts will have been in vain if they are not globally implemented on a consistent and timely basis.” The US notably has not yet fully implemented the 2004 Basel II agreement. However, the country hope to have a draft for the implementation of Basel III by the end of the year, according to an earlier report by the FT.
Citigroup, JP Morgan Chase, BNP Paribas, Royal Bank of Scotland and HSBC could face the steepest capital surcharges of 2.5 percentage points, in provisional plans drawn up by global regulators, Bloomberg reported. The list has been fleshed out as part of G20 plans to force banks to boost their reserves above minimum levels previously agreed by international regulators in a bid to further reduce systemic risks. Bank of America, Barclays and Deutsche Bank might face surcharges of 2 percentage points, Bloomberg said, citing a confidential draft of the plan. A simplified version of the plan of global systemically important financial institutions, which did not include surcharge plans for individual banks, was published on Friday 4 after the conclusion of the G20 meeting by the Financial Stability Board, FT Alphaville reported. Read more
The UK’s financial regulator has acknowledged for the first time that new European capital rules for insurers are now likely to come into force in January 2014, a year later than expected, the FT says. However, it stopped short of saying UK insurers would avoid running two sets of capital models and reporting standards in parallel during 2013, when the Financial Services Authority runs its triennial capital adequacy test of the industry. European political authorities are expected to delay the full implementation of Solvency II, the new capital regime for insurers, by 12 months to the start of 2014 to give more time for many countries’ regulators and local industries to prepare for the rules.
Britain has withdrawn its objections to a key piece of European Union financial regulation after winning a series of last-minute concessions over the rules for derivatives markets, the FT reports. While failing to achieve his most ambitious goals, George Osborne, the UK chancellor of the exchequer, hailed a clutch of “significant steps forward” in talks where he was at one point “outnumbered 26 to one”. However, he dropped Britain’s most controversial demand – to extend the scope of the regulation package to exchange-traded derivatives. The concession enables EU member states to agree to begin talks with the European parliament on new rules for over-the-counter derivatives. Read more
The committee behind Basel III is set to press on with introducing extra capital requirements for the world’s 28 biggest banks, countering heavy lobbying in recent months, the WSJ says. Regulators will meet this week to consider comments on the capital surcharge, which would require banks to hold between 1 and 2.5 per cent more capital against risk-weighted assets in addition to a 7 per cent global minimum. US officials have swung behind the surcharge as it becomes clear that the rule will both remain largely the same and become finalised later this year, despite criticism of the capital regime by JPMorgan’s Jamie Dimon. Read more
Scheduled for Tuesday actually:
Two pertinent ones, via London Banker:
Liquidity means you can generate cash from a physical asset or paper claim. Read more
Federal officials are probing Oracle’s software sales to governments in Africa for possible violations of bribery laws, the WSJ says. The Justice Department has led a criminal investigation for at least a year while the SEC is conducting a civil inquiry. The probes focus on whether Oracle or its agents made improper payments to officials in order to secure sales. Enforcement of the Foreign Corrupt Practices Act has markedly stepped up in recent years, with $2bn of fines collected in 2009 and 2010 versus $11m in 2004. Read more
Google has reached a $500m settlement with US prosecutors over advertising for Canadian pharmacies selling drugs into the United States, Reuters reports. The forfeiture represents Google AdWords revenue from the pharmacies, and pharmacies’ sales of drugs in US markets. Google was aware as long ago as 2003 that it was illegal in most cases for pharmacies based in Canada to ship prescription drugs into the US, according to an agreement between prosecutors and the company that was made public on Wednesday. Google had set aside $500m in unspecified legal charges in May. Read more
The SEC’s internal watchdog has opened an inquiry into whether the agency knew about the destruction of documents related to probes of financial firms, despite telling the government otherwise, reports the WSJ. The agency’s Inspector General has already been looking at the disposal of so-called “matters under inquiry” documents, which were part of preliminary investigations into securities law violations which never became full cases. The move follows a whistle-blower’s claims in a Rolling Stone story that thousands of documents were improperly destroyed. Senator Chuck Grassley asked the SEC to explain its record-keeping policies earlier this month. Read more
Yesterday the Merkozy plan for a Financial Transaction Tax caused some hefty damage for London-listed exchanges and brokers.
Not a surprise really. The analysts at Adam Smith Institute were hopping mad on Thursday: Read more
Why, it’s an investigation.
RTRS-DANISH FSA SAYS TO REPORT NORDEA BANK DENMARK TO POLICE IN CONNECTION WITH INVESTMENT ANALYSIS ON PANDORA Read more
Charts via short-selling information specialists Data Explorers, incorporating a gauge of securities lending in both the financials currently subject to the short-selling bans, and in their markets.
Compare and contrast: Read more
Regulators investigating alleged manipulation of the London interbank offered rate have turned their focus to yen rates set in London and the Tokyo interbank offered rate, the FT reports. UBS has confirmed the investigation’s widened scope by disclosing in its results that it had received “conditional leniency and conditional immunity” from the Department of Justice for turning over information on the setting of the two rates. Regulators are probing whether traders used derivatives to place bets on future yen and dollar rates and then colluded with bank treasury departments to move the rates in their direction, people familiar with the matter said. Read more
Earlier on Monday — Italy’s financial regulator hits the shorts:
SEC officials will meet with Chinese counterparts next week to push for access to auditors based in China who have been caught up in the reverse-merger scandal, the FT reports. The talks will centre on proposals to allow inspectors from the Public Company Accounting Oversight Board to review auditing firms, as required under the Sarbanes-Oxley law. About 110 auditing firms based in China and Hong Kong are registered with the PCAOB. However, it is not clear whether existing Chinese law allows foreign regulatory access, says Bloomberg. Read more
US authorities have stepped up scrutiny of Chinese groups listed on their shores but remain hamstrung by a lack of access to data and limits to what they can do should they find wrongdoing, says the FT. While a horde of reverse merger stocks have been delisted by the SEC recently, critics have pointed to the agency’s poor record in working with local Chinese regulators to acquire documentation. Meanwhile, US auditor regulators are also limited as inspectors are unable to enter China to examine auditing firms located there, despite the resignation of auditors from at least two dozen of the companies involved in the reverse mergers scandal. Read more
Also: why ‘maximum harmonisation’ might end up getting someone’s Vickers in a twist.
An odd bump in Lloyds and Barclays on Monday: Read more
Large banks are developing a strategy against proposed new rules to raise capital requirements. Reuters, citing a person familiar with the talks, reports that the campaign comes ahead of meetings with international regulators set up over the next few weeks. They aim to come up with their own proposal for new capital buffers, to head off talk of required capital levels rising to as much as 14 per cent – a figure mentioned by Fed governor Dan Tarullo last week. Read more
Jamie Dimon has confronted Ben Bernanke over the pace of financial regulation, suggesting that reforms to capital requirements have held back the recovery, reports the FT. “Has anyone bothered to study the cumulative effect of all these things?” Mr Dimon asked. “There’s no more subprime, there’s no more Alt-A, there’s no more mortgages being packaged, the CMBS market has been completely reformed,” Dimon also said, suggesting that bank capital reforms had made it uneconomic to hold mortgages on books, adds Bloomberg. Bernanke countered that regulators were aware of the balance between regulation and constraint, Housing Wire says. Read more
Markets face a slowdown in over-the-counter derivatives trading if more than 100 new requirements mandated by the Dodd-Frank Act are held up by regulatory delays in finalising rules, the WSJ reports. The Act requires the provisions to take effect by July 16, 360 days after the law’s signing. The CFTC and SEC are meant to finish their guidance on derivatives by July 21 but are racing to supply further clarification before the July 16 deadline. Traders fear that deals made after the deadline could be subject to lawsuits seeking to make them null and void, even if regulators declare that swaps transacted in the period will not be illegal. Read more
An independent review of the Financial Services Authority’s handling of Royal Bank of Scotland will assess whether the regulator’s own report was “a fair and balanced summary” of the evidence it gathered in an enforcement probe, but will not say whether the FSA was right not to press charges against RBS, the FT says. The Treasury select committee set terms for the review on Wednesday, as part of a move to make the FSA more accountable to the public. The regulator attracted sharp criticism in December for closing its probe of RBS with neither charges nor a public explanation. By March, an internal auditor had produced a separate report of more than 100 pages detailing the FSA’s supervisory failures surrounding RBS. The report will be made public alongside the new review.
Google has taken a charge of $500m to set aside for a potential legal settlement with the Justice Department over its practices in online advertising, says Reuters. The admission, contained in a terse one-line statement in the company’s official quarterly filing with the Securities and Exchange Commission, is the first indication that US regulators have found significant fault with the advertising business that lies at the heart of the company’s moneymaking machine, the FT reports. Google has seen search advertising land it in trouble with regulators before, including a $31.5m settlement in 2007 over advertising by gambling companies. Read more
Wall Street banks have been losing chief financial officers at an unusually high rate since the crisis, a trend that is unnerving investors who remain wary of risk and regulation, the FT reports. Bank of America’s replacement of Chuck Noski on Friday leaves Goldman Sachs as the only major bank not to have replaced its finance chief in the last two years. David Viniar has served at Goldman since it went public in 1999 — a normal tenure for CFOs throughout corporate America, but increasingly rare at banks. Analysts said BofA’s move was a ‘red flag’ and ‘eyebrow-raising’, following concerns over how banks will respond to fresh capital requirements and regulation. Read more
Get the little flags at the ready: on Tuesday JP Morgan Cazenove published the final installment of its trio of reports on regulatory arbitrage.
It is stirring patriotic sentiment up on Capitol Hill, with some lawmakers worried that the US’s comparative advantage will be blunted, according to Politico. Read more