SEC Proxy Rule, U.K. Bank Capital, SocGen Fined: Compliance

U.S. regulators will let investors owning 3 percent of a company nominate directors on corporate ballots, a step that may help shareholders oust board members accused of overpaying executives and failing to boost shares.

The Securities and Exchange Commission voted 3-2 yesterday to allow investor board candidates on the proxy statements sent to stockholders before director elections. Investors or groups that meet the ownership threshold for three years will be eligible to offer nominees.

The SEC acted in response to investor complaints that company-selected directors failed to rein in compensation and financial-industry risk-taking. Business groups including the U.S. Chamber of Commerce have fought the change, arguing that labor unions and pension funds will use the threat of proxy fights to seek concessions that would harm companies.

The law revamping financial regulation signed by President Barack Obama last month authorized the SEC to let investors nominate directors on corporate proxies. The law’s language may make it easier for the SEC rule to withstand a court challenge.

For more, click here.

Compliance Policy

U.K. Banks May Face Higher Capital Charges for Illiquid Assets

Banks could be required to hold more capital against financial products that are difficult to value, under proposals from the U.K.’s Financial Services Authority.

Valuations for illiquid assets, exotic securities and large trading positions “always contain an element of uncertainty,” and rules “should require firms to hold capital against this risk,” the regulator said in a report yesterday. Relying too heavily on principles of market efficiency can lead to “severe consequences,” Paul Sharma, FSA director of prudential policy, said in an e-mailed statement that accompanied the report.

Global regulators are reviewing rules governing trading, bank liquidity and capital as part of the response to the worst financial crisis since World War II. The FSA issued yesterday’s report to give financial firms the chance to respond to the proposals. The closing date for responses is Nov. 26.

India May Miss April 1 Deadline to Start Goods and Services Tax

India may miss the April 1 deadline to introduce a goods and services tax as state governments sought more time to study the proposal, a finance ministry official said. Revenue Secretary Sunil Mitra said yesterday in an interview in New Delhi it is “unlikely” the deadline will be met.

The goods and services tax, or GST, aims to unify multiple indirect taxes such as excise and sales levies imposed at the federal and state levels. The government says the current tax structure inflates prices, delays movement of goods and encourages evasion.

The government’s plan to move to GST requires amendments to the Indian constitution. State governments have asked for more time to study the bill and therefore it can’t be tabled in the current session of parliament, which ends Aug. 31, Mitra said.

Compliance Action

SocGen Fined $2.4 Million for Inaccurate U.K. Reports

Societe Generale’s London branch was fined 1.58 million pounds ($2.44 million) for failing to file accurate transaction reports to the U.K. financial regulator, which uses the information to look for insider trading. The regulator described the failure as “a serious breach of our rules.”

The Paris-based bank submitted inaccurate reports or failed to submit any data on 80 percent of reportable transactions between November 2007 and February 2010, the Financial Services Authority said yesterday in a statement. A “significant number” of the transaction reports were rejected and not resubmitted, the regulator said.

The FSA has fined Barclays Plc, Credit Suisse Group AG, Commerzbank AG and two other firms over the past 12 months for failing to provide accurate reports.

SocGen didn’t submit accurate reports on 18.8 million of its reportable transactions, the FSA said. The bank commissioned a review of its transaction reporting and is developing a quality-control process to correct the issue. It received a 30 percent discount on the fine for cooperating with the FSA.

Two Men Charged With Fraud in German Soccer-Match Fixing Probe

German prosecutors indicted two suspects on fraud charges related to claims they were part of a Europe-wide conspiracy to pay referees and players 350,000 euros ($441,875) to fix 24 soccer matches, 10 of which were in Germany. The two men are in pre-trial detention.

The men, who weren’t identified, were among the leaders of the match-fixing ring and made more than 1.45 million euros betting on matches, prosecutors in Bochum, Germany, said yesterday in a statement on their website.

German prosecutors and police arrested 17 people in November in the scandal that hit leagues in nine countries, including Germany, Turkey and Switzerland. The governing body for Europe’s most popular sport has called the case the biggest scandal facing soccer.

Landsbanki Islands’s Bondholders May Get Next to Nothing

Creditors of failed Icelandic lender Landsbanki Islands hf will get next to nothing back from their investments after assets are sold to cover the bank’s priority claims, Finance Minister Steingrimur Sigfusson said.

The comments end hopes creditors, including BNP Paribas SA and Nordea Bank AB, may have had of recouping their share of $27.4 billion in debt owed them since Landsbanki’s collapse in October 2008. The government is struggling to resurrect relations with international investors after the failure of the island’s three biggest banks almost two years ago left $86 billion in debt, according to figures provided by the lenders’ resolution committees.

Iceland imposed emergency legislation on Oct. 6, 2008, allowing the state to take control of the three. The bill allowed the Financial Supervisory Authority to merge financial institutions and take over shareholder powers at meetings. Parliament has yet to decide on when the emergency bill will be reversed.

The state-created successors to Iceland’s failed banks may be facing a second round of failures after the Supreme Court on June 16 banned the indexation of loans in kronur to foreign exchange rates, leaving the banks liable for as much as $4.3 billion in currency losses, Sigfusson said on July 7.

For more, click here.

Zions Direct Fined for Disclosure Failure in Online CD Auctions

Zions Direct Inc., the online broker dealer of Zions Bancorporation, will pay $225,000 to settle regulatory claims that it failed to disclose a potential conflict of interest in online auctions for certificates of deposit.

Zions Direct began auctioning CDs issued by affiliated banks on its website in February 2007. Before November 2008, Zions Direct failed to tell investors that an affiliate, Liquid Asset Management, was participating in the auctions for its customers, the Financial Industry Regulatory Authority said yesterday in a statement. The regulator didn’t say how many consumers were affected or how much money was involved.

Salt Lake City-based Zions didn’t admit or deny wrongdoing in settling the claims, Finra said.

“We have corrected our disclosures and we believe that they now meet Finra standards,” Zions spokesman James Abbott said in a phone interview.

Thrifts Had $1.49 Billion Profit in Second Quarter, OTS Says

U.S. savings and loans reported a $1.49 billion combined profit in the second quarter as the industry continued recovery from the recession, the federal thrift regulator said.

The profit, a decline from $1.72 billion in the preceding three-month period, is the fourth consecutive quarterly profit, the Office of Thrift Supervision said yesterday in a statement. The number of so-called problem thrifts, those at risk of failure, rose to 54 from 50 in the previous quarter, the OTS said.

The OTS, which supervised 753 thrifts at the end of the second quarter, will merge with the Office of the Comptroller of the Currency, overseer of national banks, as part of the Dodd- Frank regulatory overhaul law. The OTS is a bureau of the Treasury Department.


Drillers May Face Months of Delay Even After Obama Lifts Ban

President Barack Obama’s administration may agree to an early end for its moratorium on deep-water oil and gas drilling while backing new regulations that may keep rigs idle for months afterward, according to Michael McKenna, president of MWR Strategies, an oil industry consulting firm in Washington.

Obama is likely to lift the drilling ban in October, ahead of its scheduled Nov. 30 expiration, McKenna said in an interview. Heightened scrutiny of drilling’s risks may delay the resumption of operations by companies such as BP Plc and Apache Corp. until mid-2011, he said.

The administration halted drilling in waters deeper than 500 feet after BP’s Macondo well in the Gulf of Mexico blew out April 20. Government officials from Gulf Coast states say the moratorium is ravaging their regional economy, putting the White House under political pressure to end the ban early, according to McKenna.

For more, click here.

To contact the reporter on this story: Carla Main in New Jersey at

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.