Cameron and Tyler Winklevoss’s proposal for an investment tracking the virtual currency Bitcoin faces a protracted fight to win over regulators and market makers.
The twins, who attended Harvard University at the same time as Facebook (FB) founder Mark Zuckerberg and claimed in a lawsuit that the idea for the social media site was theirs, this week filed with the U.S. Securities and Exchange Commission to create the Winklevoss Bitcoin Trust, a variation of an exchange-traded fund that would hold Bitcoins and issue shares on a secondary exchange.
The trust would be the first product in the $2 trillion ETF industry to track a virtual asset, rather than securities such as stocks and bonds or commodities such as gold and oil. The biggest hurdle for the 31-year-old brothers is persuading the SEC, which has moved haltingly when approving funds that break new ground, to give their product the green light. The examination could take years, according to Reginald Browne, head of exchange-traded product trading at Knight Capital Group Inc.
The trust aims to attract investors who might be put off by the complexities and costs associated with trading in the digital currency.
“We recognized that there was not an easy way to gain Bitcoin exposure, so we’re trying to creating a simple solution,” Tyler Winklevoss said in an e-mailed statement.
Bitcoin is a virtual currency that can be used to buy and sell a broad range of items. The Winklevosses own about $10 million of Bitcoins, 1 percent of the outstanding amount.
Regulators haven’t released comprehensive guidance on how Bitcoins might be regulated.
The SEC’s division of corporate finance reviews registration statements for securities issuers to make sure they comply with disclosure requirements, John Nester, a spokesman, said in an interview. The review doesn’t produce any comment on a product’s utility, he said. The Bitcoin trust would also require approval from the agency’s division for trading and markets, he said.
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European Drug Group to Require Disclosing Payments to Doctors
Drugmakers operating in Europe must disclose payments made to doctors starting in 2016 in an effort to boost transparency and make patients aware of possible conflicts of interest.
The new ethical code requires all members of the European Federation of Pharmaceutical Industries and Associations to disclose payments made in 2015 by 2016, the trade group said in a statement July 2.
Each company must reveal names of health-care professionals and associations that have received payments, the amounts, and the types of relationships on their websites or on a common website, EFPIA said. The rule follows a similar U.S. provision in President Barack Obama’s health law.
The Association of the British Pharmaceutical Industry started publishing aggregate totals in May of payments made last year to health-care professionals.
China Bond Futures May Trade in September, Journal Says
China may restart trading of government bond futures in September, the China Securities Journal reported July 3, adding to signs an 18-year ban is drawing to an end.
The China Securities Regulatory Commission will decide on an exact time for the start of trading after the State Council approved the plan for government bond futures, the newspaper, which is controlled by the official Xinhua News Agency, reported July 3, citing people it didn’t identify. Trial trading of the futures during the past year has gone smoothly, the paper said.
China first allowed trading of treasury futures in 1992, before ordering a halt in 1995 after a probe into market manipulation led to the jailing of Guan Jinsheng, then president of Shanghai International Securities Co.
Regulators have sought to restart trading to provide investors with a hedging tool for the fixed-income market.
The securities regulator didn’t immediately respond to faxed questions seeking comment.
Spain May Sanction Deloitte for Failure to Probe Bankia Assets
Spain started proceedings to sanction Deloitte SL and partner Francisco Celma Sanchez over their role as auditors of Bankia SA (BKIA) before it was nationalized last year.
The Spanish Accounting and Audit Institute, a unit of the Economy Ministry, said Deloitte may have breached rules that could have compromised its independence as an auditor, according to a June 13 report obtained by Bloomberg. Sanctions may include a fine or, in the worst case, stripping Deloitte and Celma of their licenses to work as auditors in Spain, the report showed.
Deloitte may have had a conflict of interest because it advised Bankia’s parent company on its corporate structure at the same time it was auditing the lender, the institute said.
“This proceeding could perfectly well be dismissed or could conclude with a proposed penalty,” Deloitte said in an e-mailed statement. “The proceeding focuses on technical formalities which in no case represent a modification of the entity’s audited financial statements.”
Deloitte has 15 days from June 13 to respond to the allegations, the document said. Spokesmen at Bankia and the Economy Ministry in Madrid declined to comment and a spokeswoman for Deloitte referred questions to the statement.
Glaxo, Danone Probed as China Scrutinizes Foreign Companies
China’s probes of GlaxoSmithKline Plc (GSK) and Danone (BN) highlight challenges for foreign companies in a market where they may be a bigger “prize” for regulators seeking to allay concerns that medicines and foods are unsafe.
The U.K. drugmaker is being probed for alleged bribery, while Danone, along with Nestle SA’s (NESN) Wyeth brand, Mead Johnson Nutrition Co. (MJN) and Abbott Laboratories (ABT), are under investigation for pricing that may have violated anti-monopoly laws.
Demands for a government crackdown on safety violations has taken hold in China, partly fueled by food-product scandals, and Premier Li Keqiang, who took office in March, has pledged to root out consumer abuses. More than two thirds of member companies that responded to a survey by the American Chamber of Commerce in Shanghai released in February said the regulatory environment was either “not improving” or “deteriorating.”
A senior Glaxo finance executive in Shanghai and employees in Beijing were detained as part of a corruption investigation, the South China Morning Post reported on July 1, citing an unidentified person from Shanghai’s drug industry. Simon Steel, a Glaxo spokesman in London, declined to comment on June 30 about whether any staff have been arrested or detained.
Police in the southern city of Changsha said June 28 that senior Glaxo China executives were suspected of economic crimes and were being investigated, without elaboration. The company is unclear about the nature of the investigation, Steel said.
Danone, Nestle’s Wyeth brand, Mead Johnson, Abbott Laboratories, Dutch producer Royal FrieslandCampina NV as well as local firm Biostime International Holdings Ltd. (1112) are being investigated by the National Development and Reform Commission, China’s top economic planning agency, for pricing of their infant formula, the official People’s Daily reported July 2.
The agency didn’t answer at least five calls or respond to a fax seeking comment on its investigation.
The NDRC has evidence the companies sold products at high prices in China and their prices have increased about 30 percent since 2008, according to the newspaper, which is published by the Communist Party.
Danone, Mead Johnson and Nestle said they are cooperating with the authorities. Biostime hasn’t received any official feedback or information on possible penalties from the NDRC, Jason Xu, the firm’s assistant chief financial officer, said over the phone July 3. Jan-Willem ter Avest, a spokesman from Royal FrieslandCampina, said in an e-mail that the company is fully cooperating with the government to comply with pricing policies and regulations. A spokesman for Abbott couldn’t be reached for comment.
HSBC Judge Approves $1.9 Billion Accord on Money Laundering
HSBC Holdings Plc (HSBA)’s $1.9 billion agreement with the U.S. to resolve charges it enabled Latin American drug cartels to launder billions of dollars was approved by a federal judge.
U.S. District Judge John Gleeson in Brooklyn, New York, signed off July 1 on a deferred-prosecution agreement, a critical component of the London-based bank’s settlement. The order was filed more than six months after the government announced reaching an accord with the bank.
Both sides argued Gleeson didn’t have the power to approve or reject the terms they came to, the judge said in his order. Gleeson disagreed, writing in his order that the court is “not a potted plant” and approving the deferred-prosecution agreement is “the legitimate exercise of the court’s authority.”
HSBC was accused of failing to monitor more than $670 billion in wire transfers and more than $9.4 billion in purchases of U.S. currency from HSBC Mexico, allowing for money laundering, prosecutors said.
Gleeson said he will continue supervising implementation of the deal, under which the bank agreed not to contest criminal charges of failing to maintain an effective anti-money-laundering program, among other violations.
The bank, Europe’s largest, agreed to pay a $1.25 billion forfeiture and $665 million in civil penalties, prosecutors announced in December.
The case is U.S. v. HSBC Bank USA NA, 12-cr-00763, U.S. District Court, Eastern District of New York (Brooklyn).
Mucci, Valliere, Others Comment on Health-Law Mandate Delay
Martin Mucci, chief executive officer of Paychex Inc. (PAYX), talked about the Obama administration’s decision to delay a crucial provision of its health-care law, giving businesses an extra year to comply with a requirement to provide their workers with insurance.
The delay is a “positive” for employers, he said. Mucci spoke with Betty Liu on Bloomberg Television’s “In the Loop.”
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