SEC Clout Doubt, Proxy Access, Basel Tip: Compliance

Ex-Securities and Exchange Commission Chairman Arthur Levitt, in an interview today with Bloomberg Television, said it’s unlikely the SEC will ultimately be stripped of its responsibilities.

“I don’t think it’s a great idea nor do I necessarily think it’s going to happen,” Levitt said. The SEC “is a pretty powerful unit and to substitute that for a new bureaucracy is a mistake. I don’t think policy makers are likely to go down that path.”

Levitt, who also admits the SEC needs stronger resources to make up for “nearly 15 years of deregulatory efforts,” made his comments as the Obama administration prepares to unveil its proposed regulatory overhaul, which may call for stripping the SEC of some of its powers, Robert Schmidt and Jesse Westbrook of Bloomberg News report.

The proposal, still being drafted, is likely to give the Federal Reserve more authority to supervise financial firms deemed too big to fail. The Fed may inherit some SEC functions, with others going to other agencies, the people said. On the table: giving oversight of mutual funds to a bank regulator or a new agency to police consumer-finance products, two people said.

The 75-year-old SEC, chartered to oversee Wall Street and safeguard investors, has seen its reputation tarnished as some lawmakers blamed it for missing the incipient financial crisis and failing to detect Bernard Madoff’s $65 billion Ponzi scheme. Any move to rein in the agency is likely to provoke a battle in Congress, which would need to approve the changes, and draw the ire of union pension funds and other advocates for shareholders.

“It would be a terrible mistake,” said Stanley Sporkin, a former federal judge and enforcement chief at the SEC. “Whatever the SEC has done or didn’t do, it is still the premier investor protection agency around.”

SEC Chairman Mary Schapiro’s agency has been mostly absent from negotiations within the administration on the regulatory overhaul, and she has expressed frustration about not being consulted, according to people who have spoken with her. She has pledged to fight any attempt to diminish the SEC, they said.

Treasury Secretary Timothy Geithner and National Economic Council Director Lawrence Summers are leading the administration’s effort to redraw the lines of authority for policing the financial system; the other key participants are Levitt, former Fed Chairman Paul Volcker and Elizabeth Warren, the Harvard University law professor who heads the congressional watchdog group for the $700 billion Troubled Asset Relief Program.

“We’re going to have to bring about a lot of changes to the basic framework of oversight, so there’s better enforcement,” Geithner, said May 18 at the National Press Club in Washington. “That’s going to require simplifying, consolidating this enormously complicated, segmented structure.”

For Robert Schmidt story, click here.

Direct Shareholder Access to Proxy Nominees Before SEC Today

The U.S. Securities and Exchange Commission at a public meeting in Washington this morning was set to propose letting 1 percent shareholders nominate directors on corporate proxy statements, giving investors direct access with no need for a bylaw first.

Thresholds will depend on the size of the company, Jesse Westbrook of Bloomberg News reported. For companies with market values exceeding $700 million, the proposal would allow investors who have held 1 percent of shares for one year to nominate directors on the proxy. For smaller firms, the required stake would be 3 percent or 5 percent.

“This is going to strike chief executives of all public companies as confrontational,” said James Cox, a law professor at Duke University in Durham, North Carolina. “It gives shareholders a significant amount of leverage.”

Activist investors such as Carl Icahn and Nelson Peltz have waged successful proxy fights to get their nominees elected to boards of companies they say are underperforming. Under current SEC rules, the process requires distributing a separate ballot listing dissident nominees. Unions and pension funds say the process is too expensive for most investors to pursue.

For the Jesse Westbrook story, click here.

Schumer Proposes Giving Investors Executive Pay Vote

Senators Charles Schumer and Maria Cantwell proposed giving investors a non-binding vote on executive pay and more power to elect corporate boards to rein in excessive compensation and risk-taking.

The senators’ “shareholder bill of rights” aims to curb pay packages “that reward short-term actions but not long-term thinking,” Schumer said yesterday at a Washington news conference. The New York Democrat wants to make the bill part of the regulatory overhaul Congress is weighing amid the worst financial crisis since the Great Depression.

“Leadership at some of the nation’s most renowned companies took too many risks and too much in salary while their shareholders had too little to say,” said Schumer, a member of the Senate Banking Committee. Bill co-sponsor Cantwell, a Washington state Democrat, was an executive at Seattle-based RealNetworks Inc. before she was elected to the Senate in 2000.

Schumer’s bill drew criticism last week from Martin Lipton of Wachtell Lipton Rosen & Katz in New York, whose clients include some of the biggest U.S. banks and corporations.

In a statement on May 15, Wachtell said Schumer’s bill proposes to enhance stockholder power and thereby “fuel the very stockholder-generated short-termist pressure that, in the view of many observers, contributed significantly to the financial and economic crises we face today.”

The bill would also expand investors’ authority to nominate directors on proxy ballots. The U.S. Securities and Exchange Commission meets today to consider proposing changes to rules that let firms exclude shareholder nominees from ballots.

Non-binding say-on-pay “by itself isn’t going to change behavior,” said Mark Borges, a principal with California-based pay consultant Compensia Inc. “If companies want to engage shareholders, they can do it without say-on-pay.”

For Ian Katz story on Schumer’s bill, click here.

For Marty Lipton’s opposition to the bill, click here.

For more on Schapiro’s proposal, click here.

For a copy of Schumer’s draft bill, click here.

For more from Brown, click here.

Basel Committee Says Stress Tests Remain Critical for Banks

Stress testing remains a critical tool for banks and regulators to help financial institutions survive future crises, the Basel Committee on Banking Supervision said.

“The current crisis underscores the importance of stress testing as an essential risk management and capital planning tool,” said Nout Wellink, chairman of the Basel Committee and head of the Dutch central bank. The committee “will follow up to ensure” that banks use stress testing as part of their governance, he said.

The Basel Committee today released a report recommending that stress-testing programs take into account developments in the broader financial system and cover a wide range of risks.

“By itself, stress testing cannot address all risk- management weaknesses,” the report said. “As part of a comprehensive approach, it has a leading role to play in strengthening bank corporate governance and the resilience of individual banks and the financial system.”

Citigroup, Bank of America Insiders Reap Millions on Stock Buys

Citigroup Inc. and Bank of America Corp. directors and managers generated profits of more than $25 million from stock purchases made earlier this year amid speculation that the lenders would be nationalized, David Mildenberg of Bloomberg News reports.

Bank of America directors and managers, including Chief Executive Officer Kenneth Lewis, gained about $6.57 million from buying stock in January and February. Citigroup’s Roberto Hernandez Ramirez, a former director who is nonexecutive chairman of unit Banco Nacional de Mexico, bought 6 million shares at $1.25 on March 2. The stock has gained more than $15 million in value.

Bank of America, the largest U.S. bank by assets, and Citigroup, the third-largest, have surged by 196 percent and 155 percent, respectively, since March 1 amid speculation that growth in the U.S. economy may resume later this year. The banks are benefiting from improved bond-trading revenue, helping push first-quarter profit above analysts’ expectations.

The banks each accepted $45 billion in capital from the U.S. Treasury’s rescue fund, which carries curbs on executive compensation. Those rules don’t prevent executives and directors from using their own money to purchase shares on public stock exchanges. Investors track insider buying and selling to speculate on a company’s performance before the results are officially disclosed.

Lewis holds a $2.5 million profit after buying 400,000 shares for $4.81 to $6.03 each, according to data compiled by Bloomberg. That’s more than his $1.5 million salary in 2008, when Lewis got no bonus. Twelve other directors and officers bought about 640,000 shares for as little as $3.78, with some more than tripling their investment at today’s prices.

For more, click here.

Fed Adds Legacy Assets to TALF, Expands Ratings Firms to Five

The Federal Reserve will include legacy assets for the first time in a $1 trillion program to revive credit markets, expanding the effort to commercial real estate securities issued before the start of this year.

The central bank also expanded the number of credit-ratings companies permitted to rate assets for the Term Asset-Backed Securities Loan Facility to five after Connecticut Attorney General Richard Blumenthal told the Fed that the three initial eligible companies helped fuel the global credit crisis.

Yesterday’s announcement is part of the U.S. government’s broader plans to revive credit for consumers and businesses and end the recession. Fed officials set terms for accepting older commercial mortgage-backed securities after some investors were disappointed that a May 1 announcement included TALF terms only for new CMBS.

For more, click here.

U.S. Senate’s Reed Seeks Expanded Liability for Ratings Firms

Senator Jack Reed proposed legislation that allows investors to sue credit-rating companies when the firms fail to scrutinize data on mortgages, credit-card debt and other loans that make up asset-backed securities.

The measure would also require that ratings firms increase disclosure about their fees and the methodologies they use to evaluate debt, Reed, the Rhode Island Democrat who leads a Senate Banking subcommittee that oversees the securities industry, said in a statement yesterday.

Moody’s Investors Service, Standard & Poor’s and Fitch Ratings have come under fire after pension funds and other investors bought AAA-rated securities that were backed by mortgages on which delinquency rates soared. Reed’s legislation makes the companies “more accountable through greater legal liability,” his statement said.

The measure follows efforts by the Securities and Exchange Commission, which oversees credit-rating companies in the U.S., to reduce firms’ conflicts of interest.

For more, click here.

Credit Raters Shouldn’t Be Liable for Data Accuracy, Fitch Says

Credit-rating companies shouldn’t be responsible for the accuracy of the data they analyze or liable if the ratings they assign prove wrong, Fitch Inc. Chief Executive Officer Stephen W. Joynt told Congress.

Bond issuers and underwriters should be required to perform such due diligence, Joynt said in written testimony to a House Financial Services subcommittee in Washington yesterday.

For more, click here.

Fed to Respond to TARP-Repayment Applications in June

The Federal Reserve plans to announce its first response to banks’ requests to repay Troubled Asset Relief Program funds around the week of June 8, Scott Lanman of Bloomberg News reports, citing an unnamed central bank official.

Regulators plan to make monthly recommendations to the Treasury on requests from the 19 biggest U.S. banks to repay TARP funds, the official said. Supervisors are in talks with several banks about getting approval, including supplementary information they will need to provide, the person said.

The timing means it may be at least three weeks before Goldman Sachs Group Inc., JPMorgan Chase & Co. and Morgan Stanley get an answer to their applications to refund a combined $45 billion of government funds. That would mark the biggest reimbursement to taxpayers since the $700 billion financial- rescue program began in October.

Treasury Secretary Timothy Geithner said on April 21 that he would welcome firms returning TARP funds as long as their regulators sign off. He added that regulators will consider whether banks have enough capital to keep lending and whether the financial system as a whole can supply the credit needed to ensure an economic recovery.

For more, click here.

For TARP refund-related credit risk drop, click here.

For Goldman, Morgan Stanley, JPMorgan bids, click here.

Banks Rely on U.S. to Sell Debt, Bank of America Says

U.S. banks selling debt without federal guarantees are still benefiting from implicit government backing that’s distorting investor behavior, according to Bank of America Corp. strategists.

Banks and financial companies including Citigroup Inc. and Morgan Stanley have raised about $20 billion this month without the U.S. government to demonstrate they can access capital markets on their own and escape restrictions on compensation and hiring that were imposed on recipients of the Troubled Asset Relief Program, according to data compiled by Bloomberg. Such companies are still being aided by implicit backing from the federal government, according to a report from Bank of America credit strategists in New York led by Jeffrey Rosenberg.

“We are now entering a new phase of government intervention in credit markets,” the analysts wrote. The explicit debt guarantee provided by the Federal Deposit Insurance Corp. is being replaced by a “a subtler but no less distorting form of government intervention--the moral hazard of too big to fail,” the analysts wrote.

For more, click here.

Kashkari Says ‘Too Big to Fail’ Gives Unfair Edge in Debt Sales

Neel Kashkari, former administrator of the $700 billion U.S. bank-rescue program, said firms deemed too big to fail have an unfair advantage over smaller rivals because they can more cheaply raise money in the debt markets.

Kashkari, who left government May 1, said in a speech that some officials have discussed the possibility of a “debt tax” or “systemic tax” on those institutions, without saying if he supported that approach.

“If you have some huge, global institution that is systemically important, too big to fail, too interconnected to fail, in a sense it will always be able to issue debt cheaper,” said Kashkari, 35, at the San Francisco campus of the University of Pennsylvania’s Wharton School. “People who buy that debt believe that the government is standing behind it.”

For more, click here.

Geithner Proposals May Add to Companies’ Hedging Costs, FT Says

U.S. Treasury Secretary Tim Geithner’s planned financial reforms might mean higher costs for companies that use derivatives to hedge currency, interest-rate and commodity-price risks, the Financial Times reported.

AIG Names Six to Board as Trustees Assert Control

American International Group Inc., the insurer bailed out by the U.S., said six new candidates for director will stand for election as the trustees managing the government’s stake seek to overhaul the board.

The candidates are Harvey Golub, Laurette Koellner, Christopher Lynch, Arthur Martinez, Steve Miller and Douglas Steenland, New York-based AIG said yesterday in a statement.

The trustees, named in January, are under pressure to turn around the money-losing insurer after the bailout was expanded to as much as $182.5 billion. The trustees told Congress last week that they’d selected five executives to join the board and that the insurer will also nominate one new member.

“The board needs to move very quickly to re-establish the credibility of AIG’s management team,” said Phillip Phan, professor of management at the Johns Hopkins Carey Business School in Baltimore, in an interview before the announcement.

The annual meeting has been scheduled for June 30, the insurer said. It was previously scheduled for May 13.

Credit Card ‘Bill of Rights’ Legislation Wins Senate Approval

A consumers’ credit card “bill of rights,” intended to curb fees and limit contract changes, won approval from the U.S. Senate.

The Senate’s 90-5 vote clears the way for final passage after a committee resolves differences with similar legislation the House passed April 30.

The Senate credit-card legislation would require lenders to apply payments to balances with the highest interest rates first. It would prohibit increasing a consumer’s rate on existing balances based on late payments to another lender, a practice known as “universal default.”

The American Bankers Association opposed the bill, saying in a May 11 letter to senators the measure would accelerate the contraction of available credit and would end up raising costs for borrowers as lenders seek to make up lost revenue.

For more, click here.

House Passes Mortgage Bill, Expands FDIC Credit Line

The U.S. House of Representatives approved mortgage legislation that will help the Federal Deposit Insurance Corp. rebuild the insurance fund at a faster pace and reduce an emergency assessment on lenders.

The measure passed 367-54 yesterday will more than triple the FDIC’s borrowing authority from Treasury to $100 billion with a $300 billion line of credit through 2010, according to a Democratic summary. The bill includes a so-called safe-harbor provision to help homeowners refinance by shielding loan- servicing companies from lawsuits if they modify a loan at risk of default. The Senate must pass the bill before it becomes law.

For more, click here.

NYC Comptroller Asks Pensions to Adopt Attorney General’s Rules

New York City Comptroller William Thompson asked the city’s five public pension funds to adopt principles set by state Attorney General Andrew Cuomo that would ban investment firms from hiring placement agents, lobbyists or others to obtain investments from public pension funds.

Cuomo’s “Code of Conduct” -- accepted last week by the Carlyle Group in an agreement that included a $20 million settlement fee -- also prohibits investment firms from doing business with public pensions for two years after the firm makes a campaign contribution to an elected or appointed official who can influence fund decisions.

For more, click here.


Lawyers at U.S. Firms Face FSA Insider-Trading Case

A former and a current partner at the London offices of two U.S. law firms face insider-trading charges next month brought by the U.K. Financial Services Authority, according to court documents.

Andrew Rimmington, a corporate partner at Dorsey & Whitney LLP, and Michael Gerard McFall, an ex-corporate partner at McDermott Will & Emery LLP, face FSA prosecution. The criminal prosecution relates to Novartis AG’s 2006 takeover of Neutec Pharma Ltd., according to the court documents.

It’s the fifth criminal insider-trading case prosecuted since January 2008 by the FSA, which is trying to take a tougher stand on financial crimes. Chief Executive Officer Hector Sants in March said people “should be frightened” of the regulator.

“This is going to be a very high-profile case,” said David Corker, a criminal defense lawyer who specializes in white-collar fraud at Corker Binning in London. “Bearing in mind the damage it will do to the lawyers and their firms, I hope that the FSA are convinced of the strength of their case and not just doing it to send out a deterrent.”

For more, click here.

Madoff Investor Merkin Approves Receiver for Three Funds

New York financier J. Ezra Merkin, who was sued earlier this month for $557.8 million by a trustee liquidating Bernard Madoff’s money-management firm, agreed to the appointment of receivers for three of his fund groups in a deal with New York Attorney General Andrew Cuomo.

Cuomo sued Merkin and his Gabriel Capital Corp. in April for secretly placing $2.4 billion of client funds with Madoff, who used the money in the largest Ponzi scheme ever. Merkin steered the assets to the money manager in exchange for $470 million in fees, Cuomo alleged.

David Markowitz, chief of Cuomo’s Investor Protection Bureau, told New York State Supreme Court Justice Richard Lowe in a hearing yesterday in Manhattan that a deal had been reached in which Merkin would cede control of Madoff-related assets, according to a transcript.

For more, click here.

JPMorgan Chase Lawsuit Over Credit Card Rates Is Reinstated

A consumer lawsuit alleging JPMorgan Chase & Co.’s Chase Bank violated lending disclosure laws by failing to clearly disclose reasons for raising credit card interest rates was reinstated by a federal appeals court.

Chase Bank buried too deeply in the fine print of notices amending cardholder agreements that it could change interest rates at any time and didn’t clearly disclose that it could raise rates based on changes in cardholders’ credit histories, the U.S. Court of Appeals in San Francisco ruled.

For more, click here.

Bank of America, Citigroup Sued Over 1031 Tax Scheme

Bank of America Corp., Citigroup Inc. and other banks were sued for $140 million by seven customers of bankrupt 1031 Tax Group LLC over claims they financially enabled a real-estate driven Ponzi scheme.

A federal jury in March convicted 1031 Tax Group’s founder, Edward Okun, of looting customer accounts to finance a “lavish” lifestyle before his company filed for bankruptcy. The firm was supposed to briefly hold proceeds from customers’ real-estate sales to defer their capital-gain taxes. Okun instead used the money to bet on real estate and buy luxury cars and homes, depriving hundreds of customers of $126 million.

For more, click here.

Cosmo Wins Home Arrest If He Posts $1.25 Million Bail

Nicholas Cosmo, accused of running a $413 million Ponzi scheme, won the right to be released on $1.25 million bail on the condition that he’s confined to his parents’ home with electronic monitoring while awaiting trial.

Cosmo, owner of Agape World Inc. and Agape Merchant Advance LLC, has been in federal custody since his Jan. 26 arrest. He was indicted April 23 on 10 counts of wire fraud and 22 counts of mail fraud in a scheme which prosecutors said may have swindled at least 6,000 investors.

U.S. District Judge Dennis Hurley in Central Islip, New York, yesterday raised the bail amount from $750,000 set by a federal magistrate. He also said Cosmo won’t be released until there is thorough vetting of the accounts and properties that Cosmo’s parents, sister and a family friend have pledged as surety to his bond. Cosmo’s parents and sister have put up their homes on New York’s Long Island as collateral while a friend has done the same with her home in South Carolina.

For more, click here.

SEC Filings, Interviews, Company News

Obama Union Favoritism Shocks Lenders Wary of ‘Chrysler Redux’

Hedge fund manager George Schultze says he may avoid lending to any more unionized companies after being burned by President Barack Obama in Chrysler LLC’s bankruptcy.

Obama put Chrysler under court protection on April 30 after lenders balked at a proposal giving them about 29 cents on the dollar for their $6.9 billion in debt. The investors said the president’s plan favored a union retiree medical fund whose claims ranked behind them for repayment. It was offered a 55 percent equity stake in the automaker.

Pacific Investment Management Co., Barclays Capital and Fridson Investment Advisors have joined Schultze Asset Management LLC in saying lenders may be unwilling to back unionized companies with underfunded pension and medical obligations, such as airlines and auto-industry suppliers, because Chrysler’s creditors failed to block Obama’s move. The reluctance may put additional pressure on borrowers seeking capital in the worst financial crisis since the Great Depression.

For more, click here.

Mayfair Eviction Fight Pits Credit Suisse Against Investor

Cevdet Caner, the man at the center of Germany’s biggest real estate insolvency in 15 years, is fighting eviction from his 20 million-pound ($31 million) London townhouse, complete with basement swimming pool.

His group of investment companies called Level One owes 1.5 billion euros ($2 billion) to creditors led by Credit Suisse Group AG, according to estimates by the German administrator. The two main holding companies defaulted and were placed under court administration in August, U.K. filings show, after the group bought 27,000 units of communist-era public housing in the former East Germany over three years, almost entirely with debt.

The battles with creditors are the legacy of the boom years, when banks expanded lending to real estate investors -- even those with limited experience like Caner, Simon Packard of Bloomberg News reports.

Lenders blame Caner for mismanagement and say about 50 million euros were channeled out of the Level One businesses while they failed to pay utility and tax bills, according to six people who have seen an audit of Level One’s finances. Caner, 35, said he faults the banks for a change of heart after pledging to loan him the money.

“Level One epitomizes all that went wrong in the real estate bubble,” said Christian Koehler-Ma, an administrator of more than 50 Level One companies in Germany. “On one side you have Caner -- a good salesman, charming and intelligent -- who was looking to make money.”

On the other side were the banks, which resold the loans to investors “so they didn’t think about what they were doing as thoroughly as they should have,” he said.

For more, click here.

Iceberg Fund Reports 35% Return as Global Property Values Drop

Iceberg Alternative Real Estate, a hedge fund that trades derivatives, reported a 35.2 percent return for the first two years of investing even as property values fell across the globe.

For more, click here.

Shell Shareholders Reject Executive Pay Package

A majority of Royal Dutch Shell Plc shareholders rejected an executive pay package for Europe’s biggest oil company after performance targets were missed, Fred Pals of Bloomberg News reported.

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Target Holders Should Choose Ackman, Donald, RiskMetrics Says

Target Corp.’s shareholders should elect William Ackman and former Starbucks Corp. Chief Executive Officer Jim Donald to the board and allow the number of directors to rise to 13, a proxy- research firm said.

“It’s not about whether the Target board is incompetent -- it’s about whether the board can be improved,” New York-based RiskMetrics Group Inc. said in an e-mailed statement. Glass Lewis & Co., another proxy-research firm, endorsed the incumbent directors.

Donald, 55, worked at supermarket chains Pathmark Stores Inc. and Safeway Inc. before joining Starbucks. He also worked at Wal-Mart Stores Inc., where he helped oversee the expansion of its supermarket business. His experience in the grocery industry “would likely prove valuable for a company that is seeking to expand its fresh food offerings,” RiskMetrics said.

Ackman, whose Pershing Square Capital Management LP controls the third-largest stake in Target, “has a reputation for thoughtful analysis,” according to RiskMetrics.

For more, click here.

Derivatives Market Declines for First Time on Record

The derivatives market shrank for the first time in the second half of 2008 as the global financial crisis curbed trading, the Bank for International Settlements said in a report.

The amount of outstanding contracts linked to bonds, currencies, commodities, stocks and interest rates fell 13.4 percent to $592 trillion, the Basel, Switzerland-based bank said May 18. That’s the first decline in 10 years of compiling the data. The amount of credit-default swaps protecting investors against losses on bonds and loans fell 27 percent to cover a notional $41.9 trillion of debt.

For more, click here.

Google Uses Algorithm to Identify Those Who May Quit, WSJ Says

Google Inc., the world’s most-used Internet search engine, is using an algorithm to crunch data to see which of its 20,000 employees are most likely to resign, the Wall Street Journal reported, citing company officials.

The formula is still being tested but data from employee reviews, promotion and compensation packages are being calculated using the algorithm, a computerized step-by-step problem-solving program. Google said the system had already identified a number of employees who felt under-utilized, the newspaper said.

Pimco’s El-Erian Sees More Regulation, Slower Growth

Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., said the “new normal” includes heightened government regulation, slower growth and a shrinking global role for the U.S. economy.

“We are looking at a world in which the fist of government is going to be very strong relative to the invisible hand of markets,” El-Erian said in a Bloomberg Radio interview from Pimco’s headquarters in Newport Beach, California.

For more, click here.

Comings and Goings

Deutsche Bank Hires Ex-UBS Banker as Asia-Pacific CEO

Deutsche Bank AG hired Robert Rankin, former head of investment banking for Asia-Pacific at UBS AG, as chief executive officer for the region excluding Japan.

Rankin, 45, will start June 10 and replace Colin Grassie, who is returning to Europe, Germany’s biggest bank said in a statement. He will report to Juergen Fitschen, global head of regional management. Rankin left UBS in March.

For more, click here.

Sakwa Leaves Bank of America; Lender Hires UBS REIT Analysts

Steve Sakwa, the top-rated analyst of U.S. real estate investment trusts, left Bank of America Corp. and the lender hired five analysts from UBS AG.

The analysts joining Bank of America include Jeffrey Spector, who was named head of the REIT research team, and James Feldman and Michelle Ko, hired as senior analysts, Bank of America said in a statement. Lindsay Schroll and Andrew Ryu join as associates. Carrie Gray, a spokeswoman for Bank of America, confirmed Sakwa’s departure in a telephone interview.

“You’re getting a proven commodity that’s able to hit the ground running quickly if that’s what you’re looking for,” said Jeffery Harte, an analyst at Sandler O’Neill & Partners LP in Chicago.

For more, click here.

Chubb Names AIG’s Spencer Operating Chief for Accident, Health

Chubb Corp., the insurer of corporate boards and high-end homes, named Stuart Spencer as chief operating officer for worldwide accident and health.

Spencer, who joins from American International Group Inc., will report to Andrew McElwee, operating chief of personal insurance, Warren, New Jersey-based Chubb said in a statement.

Former Citigroup Banker Mark Watson Joins Conduit Capital Board

Conduit Capital Markets Ltd., a London-based derivatives and securities dealer, said it hired Mark Watson, former head of European fixed-income at Citigroup Inc., as a non-executive director.

International Compliance

ICAP’s Spencer Gets $36 Million From Dividend Rise, FT Says

Michael Spencer, the chief executive officer of ICAP Plc, the world’s biggest inter-dealer broker, became 23 million pounds ($36 million) richer as a result of a dividend increase, the Financial Times reported, without citing anyone.

Spencer, who owns 21 percent of the company, is also the treasurer of the Conservatives, Britain’s main opposition party, the newspaper said. ICAP reported yesterday that net income rose by 4 percent and revenue by 23 percent.

Merkel’s Bad Bank Plan Would Help Capital, Sanio Says

A “bad bank” would allow for an orderly process to dispose of toxic assets and would enable banks to strengthen their capital base, said Jochen Sanio, president of Germany’s financial regulator BaFin.

Banks should get the “biggest capital strength possible,” Sanio said at the regulator’s annual press conference. A strong capital base enables banks to issue credit, he said.

Governments around the world are bolstering rules and regulations to cope with the worst global financial crisis since the Great Depression. Chancellor Angela Merkel’s cabinet last week approved a plan to set up a bad bank that would allow lenders to swap toxic assets, such as asset-backed securities that have plunged in value, for guaranteed bonds. Germany’s government also plans to tighten banking-oversight rules.

Britain Starts Talks to Sell Stakes in RBS, Lloyds

The U.K. government is speaking with potential investors about selling its stakes in nationalized banks, including Royal Bank of Scotland Group Plc and Lloyds Banking Group Plc, Gonzalo Vina and Jon Menon of Bloomberg News report, citing an official.

To contact the reporter responsible for this report: Lisa Brennan in New York at

To contact the editor responsible for this report: David E. Rovella at

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