Health Protest, China Audits, Dutch Bank Chief: Compliance
Aetna Inc. (AET)’s annual meeting was disrupted May 20 by placard-carrying protesters demanding the insurer stop funding political efforts to undo the 2010 health- care overhaul.
Marc Bertolini, chief executive officer of the third- largest U.S. insurer, was interrupted as he talked about implementation of the year-old law by about 10 protesters from a group called PennAction shouting, “We want our health care. Aetna unfair.” The group was objecting to the more than $86 million given by insurers to the U.S. Chamber of Commerce to work against supporters of the health-care law.
The protest was coordinated by a three-year-old organization called Health Care for America Now, a Washington- based coalition of labor and civil rights groups working to enact the Patient Protection and Affordable Care Act. Another affiliate disrupted Coventry Health Care Inc. (CVH)’s annual meeting May 19 in Tyson’s Corner, Virginia. It plans a similar protest at the UnitedHealth Group Inc. (UNH) meeting on May 23.
The meeting, held in Philadelphia, was only under way about five minutes before it was brought to a halt. Aetna, based in Hartford, Connecticut, resumed the proceedings about 15 minutes later.
U.K. Deal Rules Won’t Impede Private Equity Bids, Panel Says
Changing merger and buyout rules to shorten the amount of time a company has to make a takeover offer won’t impede private equity bidders, the U.K.’s deal regulator said.
One of the rule changes would require potential buyers to make a firm offer within four weeks of announcing an approach, in order to curb so-called virtual offers.
The changes being proposed -- the result of pressure by politicians following Kraft Foods Inc. (KFT)’s acquisition of Cadbury Plc last year -- are intended to protect shareholders of companies that are targets of takeover bids, Robert Gillespie, the director general of the Takeover Panel, said in a speech May 20. They are also meant to reduce advantages for hostile bidders, he said.
The regulator started a review of Britain’s takeover code last year after the Cadbury buyout provoked criticism from politicians, who said the outcome of the hostile bid was overly influenced by short-term investors seeking a profit. The consultation on the rules closes next week, and the changes may take effect in the second half of the year, Gillespie said at the Institute of Chartered Accountants in England and Wales.
Gillespie, a senior managing director at Evercore Partners Inc. who began a three-year stint at the regulator in September, said the takeover panel “is confident there will be no impediment” to private equity because, if both parties want them, extensions are likely to be granted.
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EU May Hinder Tougher Capital Rules, Osborne, Salgado Say
U.K. Chancellor of the Exchequer George Osborne, Spain’s Elena Salgado and five other finance ministers asked the European Union to scrap plans to prevent national regulators from setting tougher bank capital rules.
The European Commission is seeking to impinge on their right to force lenders to hold reserves above minimum levels set by the Basel Committee on Banking Supervision, the ministers said in a May 19 letter obtained by Bloomberg News.
“It is not acceptable to have a regulation that prohibits member states from requiring their banks to hold more capital,” the ministers said, in response to commission proposals for applying the Basel measures in the 27-nation EU. It is “imperative” that nations can decide on whether to toughen such rules for lenders, as it is their national budgets “that might bear the considerable costs of instability,” they wrote.
The Group of 20 nations decided to bolster banks’ liquidity and capital to prevent a repeat of the financial crisis. EU nations had clashed over the level of severity of the so-called Basel III measures. France and Germany led the push for softening the Basel rules. The U.K. opposed changes or delays.
China Says 17 State-Run Companies Misreported Financial Data
China Southern Power Grid Co., the country’s second-biggest electricity distributor, led 17 state-owned enterprises found to have misreported financial data, according to the nation’s government auditor.
China Southern Power Grid overstated its profit for 2009 by 910 million yuan ($140 million), or 26 percent, the National Audit Office said May 19 on its website. China Unicom (Hong Kong) Ltd., the second-biggest mobile-phone carrier, said the auditor found “improper” practices that have since been rectified.
The investigation highlights weaknesses in corporate governance and accounting practices in an economy where annual growth of more than 8 percent in the past decade has fueled rising profits among state-owned companies. The audit office has helped drive efforts to increase transparency at government departments and state-owned companies by uncovering billions of dollars in graft, irregularities and waste in the past decade.
FrontPoint Partners to Close Funds After Redemption Requests
FrontPoint Partners LLC will close some of its hedge funds after clients asked to withdraw money amid charges a manager benefited from an illegal stock tip.
“We have received capital redemption requests from some of our clients,” Steve Bruce, a spokesman for Greenwich, Connecticut-based FrontPoint said in a statement May 20. The firm “will be winding down select strategies.”
FrontPoint oversaw $7 billion at the start of November before Chip Skowron, a co-portfolio manager of its health-care funds, was tied to claims by prosecutors that the firm got advance notice on drug-trial results. FrontPoint will honor requests by investors to pull money, Bruce said in the statement. The firm plans to maintain its “core” hedge funds, he said.
Prosecutors charged Skowron with fraud last month. He was accused of avoiding more than $30 million of trading losses after a French doctor serving as a consultant to Rockville, Maryland-based Human Genome Sciences Inc. (HGSI) passed on that a hepatitis treatment had adverse affects during trials.
Skowron will plead not guilty, his lawyer, James Benjamin Jr., said in an April 14 statement.
California Agency to Appeal Decision Halting Cap-And-Trade
The California Air Resources Board will appeal a court ruling that suspends work on a cap-and-trade program to cut greenhouse gases, the agency said.
The notice of appeal will be filed today, Stanley Young, a spokesman for the agency, said in an e-mail on May 20.
Superior Court Judge Ernest Goldsmith in San Francisco on Friday ordered the board to halt further rulemaking or implementation of the program until alternatives are properly reviewed.
The board violated the “informational requirements” of the California Environmental Quality Act when it began to make rules “without first responding to comments, completing the environmental review process, and approving” the program, Goldsmith said in the ruling.
The decision is the latest development in a 2009 lawsuit filed against the board by a coalition that includes Communities for a Better Environment and the Association of Irritated Residents. The decision followed a March 18 ruling in which the court also said the board failed to adequately consider alternatives to the program to buy and sell pollution permits, such as a carbon tax.
Cohan Says Scrutiny on Goldman Is Like ‘Water Torture’
William Cohan, author of “Money and Power: How Goldman Sachs Came to Rule the World” and a Bloomberg Television contributing editor, discussed Goldman Sachs Group Inc. (GS)’s public relations strategy and U.S. Senator Carl Levin’s report on the firm’s mortgage bets.
Cohan, who spoke with Betty Liu on Bloomberg Television’s “In the Loop,” said “we’re in a very different political environment now, and a very different feeling in the public,” which puts pressure on Congress and agencies to continue to look into what happened during the financial crisis.
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Danthine Says Curbing Too-Big-To-Fail of ‘Utmost Importance’
Swiss central bank Governing Board member Jean-Pierre Danthine said it’s of the “utmost importance” to limit threats from the country’s two largest lenders, UBS AG (UBSN) and Credit Suisse Group AG. (CSGN)
He made the remarks at an event in St. Gallen, Switzerland May 20.
“Resolving the too-big-to-fail issue is a first order of priority,” Danthine said. “The recent history of developments has helped us to understand that our two big banks are not only too big to fail, but that circumstances could arrive under which they would be too big to be rescued as well”
The Swiss government, which had to prop up UBS in 2008, is seeking to toughen capital buffers for systematically important banks to ensure that they won’t turn to taxpayers for support in future. Under the proposals, UBS and Credit Suisse would have to hold common equity equal to at least 10 percent of assets, weighted according to risk, by 2019.
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Comings and Goings
SEC Names Vanderbilt’s Lewis Risk Division Chief
The U.S. Securities and Exchange Commission has named Craig M. Lewis, a Vanderbilt University professor who has studied market volatility and herd behavior by equity analysts, to be its chief economist and director of a unit responsible for spotting threats to the financial system.
Lewis, who is currently a visiting scholar at the SEC, will assume the new role next month, the agency said May 20 in an e- mail statement. He will replace Henry Hu, the founding director of the Division of Risk, Strategy, and Financial Innovation, or RiskFin, who stepped down after just over a year in the post.
RiskFin, the SEC’s first new division in 37 years, was created by SEC Chairman Mary Schapiro in 2009 to act as the agency’s “think tank.”
Dutch Appoint Knot to Succeed Wellink as Central Bank Chief
The Dutch government appointed Klaas Knot to succeed Nout Wellink as president of the country’s central bank as of July 1.
Knot “was my first choice and also the central bank’s first choice,” Finance Minister Jan Kees de Jager told reporters in The Hague May 20. Knot will serve a seven-year term, the ANP news service reported before the decision was announced.
Wellink’s successor must reform the 197-year-old central bank, which came under public scrutiny after a government- commissioned committee said it didn’t act forcefully enough in supervising Landsbanki Islands hf’s Icesave unit and DSB Bank NV. Both companies eventually collapsed.
De Jager last year decided a central bank president can no longer serve a third term, effectively ending the reign of Wellink, 67.
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Singapore Minister Gets Thai, Philippine Backing for IMF Job
Southeast Asian nations backed Singapore Finance Minister Tharman Shanmugaratnam as a possible choice to succeed Dominique Strauss-Kahn as head of the International Monetary Fund.
Shanmugaratnam “is certainly well qualified” and the IMF should consider all candidates for the role of managing director, including those from Asia or Latin America, Philippine Finance Secretary Cesar Purisima said in a Bloomberg Television interview May 20. Thai Finance Minister Korn Chatikavanij said May 19 Asia has good candidates, including Shanmugaratnam.
Strauss-Kahn’s resignation this week after being charged with attempting to rape a New York hotel maid kicked off a contest for his successor. Europe’s officials have moved to retain the job as emerging markets including Asia, South America, and Russia seek greater representation at the IMF, which has always been headed by a European since it started in 1946.
To contact the editor responsible for this report: Michael Hytha at email@example.com
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