Posco India, ING 401(k)-Trading, Ticking Up: Compliance
Stock Chart for ING Groep NV (INGA)
India’s Odisha state resumed land acquisitions to enable Posco (005490), Asia’s third-largest steelmaker, to begin building a $12 billion steel plant, a project delayed for more than seven years by farmer protests and bureaucracy.
The government of the eastern state Feb. 3 started the process of procuring 700 acres, adding to the 2,000 acres already bought, Satya Kumar Mallick, the district collector of Jagatsinghpur, the site of the plant, said yesterday in a phone interview. The land will be handed over to the South Korean steelmaker once the acquisition is completed, he said.
The factory, billed as the biggest direct foreign investment in India, has been delayed because farmers have refused to vacate the state-owned land they have occupied for generations. A resumption of the acquisition process signals the government’s commitment to revive stalled projects and an economy that the finance ministry forecasts may grow at the weakest pace in a decade.
Local farmers and villagers, including women and children, Feb. 3 protested against the proposed steel mill outside Gobindpur village as the state team prepared to enter the proposed site for land acquisition, Prasanth Paikare, a spokesman for opposition group Posco Prathirodh Sangram Samiti, said yesterday in a phone interview. A large number of policemen used force to curb the peaceful protests, he said.
Posco is still waiting for a permit from the environment ministry before it can start building the plant. An earlier clearance was suspended for further environmental review.
Stock Ticks Are Focus of SEC Meeting on Aid for Emerging Firms
Investors, exchanges and other market participants will tell the U.S. Securities and Exchange Commission that changing “tick size” for some stocks can help fuel growth by making it easier for emerging firms to go public.
Tick size, the minimum trading increment for stocks, are scheduled to be the focus of a roundtable discussion led by SEC staff at the agency’s headquarters in Washington today. Three panels will examine issues including whether larger increments for shares of smaller companies would increase trading activity and lead to more initial public offerings.
Following the roundtable, SEC commissioners may consider a pilot study of larger tick sizes for selected stocks, according to a study the agency’s staff issued in July.
Stocks of smaller companies tend to trade more lightly because they have fewer shares available to the public. Incentives to buy and sell the stocks were further reduced by a series of SEC decisions between 1997 and 2001, David Weild of Grant Thornton LLP wrote in public comments to the agency.
While the SEC’s 2001 mandate for “decimalization,” or trading in decimals instead of fractions, reduced the cost to buy or sell shares, it also reduced incentives for investment banks to make markets in lightly-traded stocks. Critics of decimalization point to a sharp decline in the number of initial public offerings since 2001.
Under a 2012 law, the Jumpstart Our Business Startups Act, the SEC is charged with deciding whether tick sizes for emerging growth companies should be higher than one cent but lower than 10 cents.
The SEC plans to use the roundtable to solicit views on how it would structure a variable-tick pilot program, according to a study issued by SEC staff in July. The study declined to recommend new rulemaking to mandate larger tick sizes without further research.
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Financial Accounting Foundation Reviews 1992 Income-Tax Standard
The Financial Accounting Foundation will review the 1992 income-tax Standard, it said in statement yesterday.
The Standard sets accounting and reporting standards for the effects of income taxes that result from organizations’ activities during current and preceding years, according to the FAF statement.
The topic of accounting for income tax was chosen for a post-implementation review because it meets several PIR criteria, FAF said in the statement. Taken into consideration in selecting the topic for PIR was the “significant change in the accounting for income taxes” represented by the 1992 Standard and the how it “affected a wide range of organizations.”
ING to Pay $5.8 Million in 401(k) Trading Disclosure Accord
An ING Groep NV (INGA) unit that administers 401(k) retirement plans agreed to pay $5.8 million to settle allegations it didn’t tell clients that it would pocket market gains on trades that were delayed.
ING Life Insurance & Annuity Co., a Windsor, Connecticut- based unit of the largest Dutch financial-services company, will pay $5.25 million to about 1,400 retirement savings plans and a penalty of $524,509 to the U.S. government, according to a settlement disclosed yesterday by the Department of Labor.
“Our longstanding policy has been to put customers in the position they would have been in had a processing error never occurred,” Joe Loparco, a spokesman for Amsterdam-based ING, said in an e-mail. “We are very pleased to have resolved this matter with the Department of Labor in a way that benefits our client plans and participants, and various stakeholders.”
ING must now disclose in contracts with 401(k) clients its practice of keeping gains on transactions that are incorrect or delayed, according to the settlement. Current plan clients will have 30 days to object to the policy. The company also will report at least once a year the amount of any gains it retained. The Labor Department said it began investigating ING’s practice in 2007 and the settlement involves transactions from 2008 through 2011.
VeriFone Says CEO Was Subject of Trading Inquiry, Now Concluded
VeriFone Systems Inc. (PAY) said Chief Executive Officer Douglas Bergeron’s trading was the subject of inquiries by the U.S. Attorney and Securities and Exchange Commission, which ended their probes without action.
Following a story in the Wall Street Journal, the company received a subpoena from the U.S. Attorney’s Office for the Southern District of New York regarding Bergeron’s trading of VeriFone stock during a specific time frame, according to a regulatory filing yesterday. VeriFone, the largest maker of credit-card terminals, also got a request for information from the staff of the SEC, the company said in the filing.
The San Jose, California-based company said it cooperated with the inquiries and provided information to support its view that Bergeron’s actions were in compliance with all laws and regulations, as well as VeriFone’s own trading policies.
Barclays Sets Aside Additional $1.6 Billion on Misselling
Barclays Plc (BARC), the U.K.’s second-largest bank by assets, said it will set aside an additional 1 billion pounds ($1.6 billion) to cover misselling of payment-protection insurance and other products.
The bank will reserve 600 million pounds for PPI redress, bringing provisions to compensate customers who were sold the insurance on loans unnecessarily or without their knowledge to 2.6 billion pounds, the London-based company said in a statement today. It also increased provisions for interest-rate hedging products by 400 million pounds as of the end of 2012, bringing the total to 850 million pounds, the highest for any U.K. bank.
Barclays has been under intense scrutiny since it was fined a record 290 million pounds in June for attempting to manipulate the London interbank offered rate and other benchmark interest rates, with the lender’s three top executives departing.
Barclays will report full-year results on Feb. 12 with Jenkins updating investors on the bank’s strategy on the same day.
Bank of England Governor Mervyn King signaled in November that lenders may need to make bigger provisions for future loan losses, the cost of regulatory fines and customer redress. He asked regulators to report back in March on how banks should comply.
The additional PPI charges follow a “higher-than- anticipated response rate to pro-active mailings” in the fourth quarter, with 1.6 billion pounds in provisions used by the end of 2012, according to the statement.
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IBM Judge Won’t Drop Demand for Future Reports in Bribe Case
The federal judge overseeing a settlement between International Business Machines Corp. (IBM) and U.S. regulators over alleged foreign bribes said he won’t drop demands for reports of possible wrongdoing by the company.
U.S. District Judge Richard Leon, who refused to accept the deal the company struck with the Securities and Exchange Commission, denied IBM’s request to alter a requirement that he be told about any future law enforcement or administrative or probes. He agreed to narrow his insistence that IBM tell him of accounting violations to include only those involving payments covered by the Foreign Corrupt Practices Act.
Leon said in December there’s a growing awareness among federal judges of the need for more rigorous review of corporate settlement agreements. Even so, his extended challenge to an agreed-upon settlement between a company and the government is a rare occurrence.
IBM, based in Armonk, New York, said in March 2011 that it had settled with U.S. regulators over allegations that it bribed Chinese and South Korean officials to win at least $54 million in government contracts. Leon, who has had the case under review for 23 months and must sign off on it before it becomes effective, said he won’t accept the reporting terms worked out between the government and IBM. He wants continuing disclosure on a broader range of possible wrongdoing than the company is willing to turn over.
The company, without admitting or denying wrongdoing, agreed in 2011 to pay $10 million in disgorgement and penalties to settle alleged violations of the books-and-records and internal-control provisions of the FCPA.
Yesterday, Kyle DeYoung, a lawyer for the SEC, told Leon that he was optimistic that a resolution could be reached.
The case is SEC v. International Business Machines Corp., 11-cv-00563, U.S. District Court, District of Columbia (Washington).
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Galleon’s Far Recorded Rajaratnam to Aid Probe, U.S. Says
Former hedge-fund manager Ali Far provided “substantial assistance” to the U.S. by secretly recording conversations with Galleon Group LLC co-founder Raj Rajaratnam as well as three others, prosecutors said.
Far, who worked for Galleon from 1999 to 2007, helped the U.S. bring cases against Rajaratnam, Ali Hariri, a former Atheros Communications Inc. vice president, and Adam Smith, an ex-Galleon trader, Assistant U.S. Attorney Reed Brodsky said in a sentencing memo filed yesterday in Manhattan federal court.
Far left Galleon to start Spherix Capital LLC with Richard Choo-Beng Lee. During his time at both funds, Far solicited illegal tips from inside sources, prosecutors said. Both men were approached by the Federal Bureau of Investigation in April 2009 and agreed to cooperate in the then-covert probe of Galleon, Brodsky said.
In a probe of insider trading tied to the expert-networking firm Primary Global Research LLC, Far helped prosecutors and FBI agents build cases against Mark Anthony Longoria, a former Advanced Micro Devices Inc. (AMD) employee, and Jason Pflaum, a former analyst with Barai Capital Management LP, according to the U.S.
Far pleaded guilty to conspiracy and securities fraud in October 2009 and is scheduled to be sentenced Feb. 11.
The case is U.S. v. Far, 09-cr-1009, U.S. District Court, Southern District of New York (Manhattan).
Former RBS Head CDO Trader Sues for Unfair Firing at Tribunal
Royal Bank of Scotland Group Plc’s former head trader for collateralized debt obligations is suing for unfair dismissal at an employment tribunal.
The case, filed by Alex Mallinson, is complicated by “ongoing investigations by the bank in respect of other employees” and two other tribunal claims by Mallinson’s colleagues on the CDO desk, RBS lawyer Diya Sen Gupta said at a London employment tribunal hearing yesterday.
Mallinson has made clear that he may file a separate High Court claim against the bank for more than 1 million pounds ($1.6 million), Sen Gupta told the tribunal. She didn’t provide details about the bank’s investigation or why the three employees were fired.
The hearing is expected to continue today after a break yesterday for employment judge Paul Stewart to review documents in the case.
“The bank does not accept that there is substance to Mr. Mallinson’s claim and will be defending it.” RBS spokeswoman Rebecca Nelson said in an e-mail. Mallinson’s lawyer Danielle Spiers didn’t immediately respond to an e-mail seeking comment.
JPMorgan, Deutsche Bank Tricked Milan in Swaps Case, Judge Says
Deutsche Bank AG (DBK), JPMorgan Chase & Co. (JPM), UBS AG (UBSN) and Depfa Bank Plc took advantage of the city of Milan, tricking the municipality into agreeing to a financing deal that didn’t meet its objective of cutting borrowing costs, wrote the judge who convicted the four banks in the fraud case.
The banks should have informed the municipality of the charges related to the derivatives that were part of the transactions, Judge Oscar Magi in Milan wrote yesterday in explaining the convictions he handed down in December.
“Information deficiencies manifested themselves and caused a grave asymmetry of information,” in the city’s ability to analyze the economics of the financing package, Magi wrote.
The banks, whose employees involved in the case were registered with Britain’s Financial Services Authority, violated U.K. rules by failing to inform the city that it was a counterparty to the lenders rather than a customer. The banks acted as arrangers of a bond sale, or advisers to the municipality, as well as its counterparties, the judge wrote.
When contacted by Bloomberg News, the banks said they disagree with the verdict and plan to appeal, reiterating their stance following the December ruling. Chris Hamilton, a spokesman for the FSA in London, declined to immediately comment.
Barclays CEO Says He’d Resign Under ‘Grave Regulatory Event’
Barclays CEO Antony Jenkins told Parliament he’d resign if the bank were to suffer a “grave regulatory event” while he was in charge.
The CEO spoke in a Parliamentary hearing today in London.
Lawmaker Mark Garnier asked Jenkins if he’d “take responsibility like a man.”
“The chief executive is responsible for the performance of the organization. In the event of a major issue identified, the appropriate consequences have to apply to that. Those include everything up to resignation,” Jenkins said in response to Garnier’s question.
Dimon Says U.S. Lacks Europe’s Will on Tax Policy
Dimon, who spoke at an event in Miami, also commented on banking regulation and the Federal Reserve’s leadership.
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Comings and Goings
Europe’s Banks Urged to Pursue More Capital-Heavy Unit Cuts
The president of the European Banking Federation is urging lenders in the region to reinvent themselves and discard the areas of their business that place too large a capital burden on their balance sheets.
“Banks need to be more efficient, that’s very simple,” EBF President Christian Clausen said in an interview in Stockholm last week. “Everything that can be done will be done in terms of moving business.”
Job losses in the financial industry were close to their highest in four years at the end of January, with European banks leading the cuts, according to data compiled by Bloomberg. Even banks in Scandinavia, which emerged from the debt crisis largely unscathed, are cutting jobs.
The bank is closing branches, according to Clausen.
The capital requirements set by the Basel Committee on Banking Supervision are forcing banks to realign or lose money. Capital-heavy services such as corporate lending are being cut back while alternatives such as debt underwriting are taking its place.
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To contact the editor responsible for this report: Michael Hytha at email@example.com.
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