EU Board Quotas, Recess Decision, Madoff: Compliance

European rules on quotas for women on company boards are necessary because businesses aren’t doing enough themselves, according to European Union Justice Commissioner Viviane Reding.

Reding made the remarks at a panel discussion at the World Economic Forum in Davos, Switzerland. She set out draft legislation in November asking governments and the European Parliament to approve rules for a 40 percent quota to favor women over equally qualified men for supervisory board seats. She said Jan. 25 such legislation was needed as the population ages.

In her remarks at Davos, Reding noted that 65 percent of university graduates in Europe are female and the continent is “not making use” of its talent. She argued that sometimes “political leadership” is needed to change the business world.

More women gained a seat on management and supervisory boards in 24 out of 27 EU countries last year, rising 2.2 percentage points to 15.8 percent in October from a year earlier, EU regulators said in a statement Jan. 25. Ten percent of management board seats and 17 percent of places on supervisory, or non-executive, boards were held by women.

The measures would apply to about 5,000 listed companies in the EU by 2020 and state-owned companies by 2018, and exclude companies with fewer than 250 employees or global sales below 50 million euros ($67 million.)

Reding said a quota rule would be temporary.

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Special Section: Davos

Draghi, Lagarde, Soros, Grilli’s Own Words on Europe

European Central Bank President Mario Draghi, International Monetary Fund Managing Director Christine Lagarde, billionaire investor George Soros, French Finance Minister Pierre Moscovici, Italian Finance Minister Vittorio Grilli and Deutsche Bank AG co-Chief Executive Officer Anshu Jain discussed the challenges facing European policy makers in 2013.

They spoke at the World Economic Forum’s annual meeting in Davos, Switzerland.

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Miller Says AIG Is Redesigning Pay Plans, Incentives

Steve Miller, chairman of American International Group Inc. (AIG), talked about the company’s pay structure and succession plans for Chief Executive Officer Robert Benmosche.

The company’s managers may get more incentive pay after the insurer exited its U.S. bailout, ending government compensation limits, Miller said.

He spoke with Erik Schatzker on Bloomberg Television’s “Market Makers” on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland. Miller also discussed the outlook for AIG’s sale of an 80.1 percent stake in International Lease Finance Corp.

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ICICI Says Indian Banks Stable, Will Continue to Grow

Chanda Kochhar, chief executive officer of ICICI Bank Ltd. (ICICIBC), India’s second-largest lender, discussed liquidity, the outlook for the Indian banking industry and foreign investment in the country.

She spoke with Bloomberg Television’s Olivia Sterns on the sidelines of the World Economic Forum’s annual meeting in Davos, Switzerland.

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Moscovici Says There’s ‘No Doubt the Euro Will Survive’

French Finance Minister Pierre Moscovici talked about the euro, which he said will survive. He also commented on France’s growth and Europe’s economic outlook.

Moscovici spoke with Francine Lacqua on Bloomberg Television’s “In the Loop,” at the World Economic Forum in Davos, Switzerland.

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Compliance Action

Swift Trade Loses Appeal Over $12 Million U.K. Market-Abuse Fine

Defunct trading firm Swift Trade Inc. lost an appeal over an 8 million-pound ($12.6 million) fine for market abuse from the U.K. Financial Services Authority.

Swift Trade, which was dissolved in December 2010, was fined for “layering,” in which multiple buy orders for shares are submitted and withdrawn to manipulate the price of a security, the FSA said in an e-mailed statement. The practice led to a “misleading impression of supply and demand and an artificial share price,” the FSA said.

The Ontario Securities Commission also found that Swift Trade breached securities laws by providing software and an electronic trading system for around 4,500 unregistered traders in 2008, according to a 2011 report. The company had appealed the penalty at a London tribunal in June, saying that the fine was “entirely disproportionate” to its activities.

Energy Swaps Shift to Futures as Dodd-Frank Rules Take Hold

More than half of the $18 trillion in notional daily trading of energy swaps has moved to futures exchanges from the over-the-counter market in response to the U.S. regulatory overhaul aimed at increasing transparency following the 2008 financial crisis.

Intercontinental Exchange Inc. (ICE) said 52 percent of its energy futures volumes during the first half of January came from contracts that before Oct. 15 were traded as swaps. CME Group Inc. (CME) said about 90 percent of energy trades on its ClearPort system are executed as futures, compared with 10 percent before the switch.

Volumes have soared at the two largest U.S. futures exchanges as oil and gas companies seek to avoid higher costs that come from being designated a swaps dealer under the Dodd- Frank Act, which the Commodity Futures Trading Commission said is any firm that does more than $8 billion of the transactions annually. The shift also helps Intercontinental and CME Group to maintain their dominant clearing businesses.

The CFTC, which has been writing the swaps rules for more than two years to improve oversight of a market that for three decades had largely escaped federal regulation, has scheduled a roundtable meeting on so-called futurization for Jan. 31. The agency plans to meet with industry representatives to discuss different collateral requirements between swaps and futures.

CFTC Chairman Gary Gensler, in an Oct. 10 speech at George Washington University in Washington, likened the efforts to securities rules enacted in the 1930s.

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SEC Said to Back Hire of U.S. Capitol Police Inspector General

The Securities and Exchange Commission has selected the inspector general of the U.S. Capitol Police to be the agency’s internal watchdog, two people familiar with the matter said.

Carl Hoecker has led the police department’s inspector office since 2006, according to an online biography. A certified public accountant who began his career as an Army military policeman, Hoecker was previously deputy inspector general for investigations at the Treasury Department. The Capitol Police provide security on the grounds of the U.S. Capitol.

The appointment would fill the vacancy left by H. David Kotz, who quit a year ago after criticism of his investigations and possible conflicts of interest. The office has been run temporarily by the inspector general of the Federal Deposit Insurance Corp.

Hoecker didn’t immediately return a call and e-mail seeking comment. SEC spokesman John Nester didn’t immediately answer an e-mail seeking comment.

The SEC inspector general is an independent internal investigator charged with ferreting out waste, fraud and abuse inside the agency.

Courts

Obama Labor Board Recess Appointments Invalid, Court Rules

President Barack Obama’s recess appointments to the U.S. National Labor Relations Board last year were “constitutionally invalid” because the Senate wasn’t in recess at the time, a federal appeals court ruled.

The decision could cast doubt on regulations passed by the Consumer Financial Protection Bureau during the time it was headed by another recess appointee.

The U.S. Court of Appeals in Washington in a unanimous ruling Jan. 25 sided with Republican lawmakers and a canning company that challenged the appointments. The judges said the definition of “the Recess” in the Constitution’s Recess Appointments Clause is limited to the period between one Congress and the next, and that Congress had begun a new session at the time the president made the appointments.

The Jan. 25 ruling is the first substantive decision by a federal appeals court on several challenges to the president’s naming of the NLRB members on Jan. 4, 2012.

Ohio Attorney General Richard Cordray was named the first head of the Consumer Financial Protection Bureau at the same time as the NLRB board members. Cordray’s appointment is also being contested in a lawsuit in federal court in Washington. Obama renominated Cordray Jan. 24.

Noel Francisco of Jones Day, who represented the canning company challenging the appointments, said anyone subject to regulations created by the Consumer Bureau would be able to file a lawsuit in Washington challenging them under the argument that Cordray’s appointment was invalid.

The case is Noel Canning v. National Labor Relations Board, 12-1115, 12-1153, U.S. Court of Appeals for the District of Columbia (Washington).

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Morgan Stanley Adviser Dowd Charged in Pharmasset Insider Case

Former Morgan Stanley (MS) brokerage adviser Kevin L. Dowd was charged with insider trading for tipping two friends ahead of Gilead Sciences Inc. (GILD)’s acquisition of Pharmasset Inc. for $11 billion, U.S. prosecutors said.

Dowd, 37, who worked at a brokerage in Aventura, Florida, learned that a Pharmasset director told his supervisors about the deal before it was announced on Nov. 21, 2011, according to a Federal Bureau of Investigation arrest complaint filed Jan. 25. He was told not to act on the information yet tipped a childhood friend, identified as J.F.

Dowd, who was arrested at his home Jan. 25, is charged with conspiracy to commit securities fraud and faces as long as five years in prison if convicted. He appeared Jan. 25 in federal court in West Palm Beach, Florida. A judge released him on a $100,000 bond. He is scheduled to appear in federal court in Newark, New Jersey, on Feb. 1.

Peter Willis, a lawyer for Dowd, didn’t immediately return a call seeking comment on the charges.

The criminal case is U.S. v. Dowd, 13-mj-6515, U.S. District Court, District of New Jersey (Newark). The SEC case is Securities and Exchange Commission v. Dowd, U.S. District Court, District of New Jersey.

Madoff Employees Questioned If Firm Was Scam, Ex-CFO Says

Frank DiPascali Jr., who pleaded guilty to helping Bernard L. Madoff carry out the biggest Ponzi scheme ever, told FBI agents that employees asked him if the business was a “scam” before the world learned the truth.

DiPascali, who pleaded guilty to 10 criminal charges and is cooperating with the U.S., gave extensive interviews to Federal Bureau of Investigation agents as part of the probe. Two former computer programmers at the firm, Jerome O’Hara and George Perez, socialized and questioned ex-Chief Financial Officer DiPascali about the legitimacy of Bernard L. Madoff Investment Securities LLC during a dinner in 2006, DiPascali told the agents. Details of the interviews appear in 60 pages of notes included in a Jan. 25 filing that reiterate some of the FBI reports made public in March.

Perez and O’Hara were charged with being part of the fraud in 2009 and are awaiting trial.

The case is U.S. v. O’Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).

Interviews

Obama Says White, Cordray to Help Protect Middle Class

U.S. President Barack Obama spoke about his nominations of Mary Jo White to lead the Securities and Exchange Commission and Richard Cordray to continue as the director of the Consumer Financial Protection Bureau.

He spoke during his weekly address on the radio and Internet.

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Khuzami on SEC Leadership, Enforcement Actions

Robert Khuzami, director of enforcement at the U.S. Securities and Exchange Commission, talked about the SEC’s leadership, performance and enforcement actions in the post- Madoff era.

Bloomberg’s Patrick Driessen and Richard Rubin also discussed U.S. corporate-tax policy with Peter Cook on Bloomberg Television’s “Capitol Gains.”

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Comings and Goings

CFTC Commissioner Jill Sommers Will Resign After First Quarter

Jill E. Sommers, one of two Republican members of the U.S. Commodity Futures Trading Commission, plans to resign from the country’s top derivatives regulator after the first quarter of this year.

She said in an interview that she has come to the decision after “internally struggling about it for months.”

The five-member CFTC has spent more than two years writing Dodd-Frank Act rules to bolster oversight of the $639 trillion swaps market and the futures industry. The agency is preparing to complete rules governing trading platforms after finishing rules for data reporting and reducing risk by having trades guaranteed at clearinghouses.

She said her intention is not to leave until after “this last group” of Dodd-Frank rules.’’ She expects to leave sometime after the first quarter of the year.

Sommers, 44, who has been a commissioner since August 2007, was named the senior member overseeing the investigation into MF Global Holdings Ltd. (MFGLQ) after CFTC Chairman Gary Gensler recused himself. Gensler and former MF Global Chief Executive Officer Jon S. Corzine worked together at Goldman Sachs Group Inc. (GS)

She said last year that the agency hadn’t adequately considered public comments on proposed rules and lacked analysis of regulatory costs and benefits.

To contact the reporter on this story: Carla Main in New Jersey at cmain2@bloomberg.net.

To contact the editor responsible for this report: Michael Hytha at mhytha@bloomberg.net.

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