At least three U.S. regulators will meet on Dec. 10 to adopt the final version of the Volcker rule banning banks from making speculative bets with their own money, according to three people familiar with the planning.
The Federal Reserve, Office of the Comptroller of the Currency and Federal Deposit Insurance Corp. are scheduling meetings to act on the rule on that date, said the people, who requested anonymity because the schedule hasn’t been announced.
Two other agencies that need to approve the rule -- the Commodity Futures Trading Commission and the Securities and Exchange Commission -- are trying to arrange Dec. 10 votes as well, three other people familiar with that effort said. The agencies aren’t required to approve the rule at the same time.
The agencies’ approval would be the final stage in the process of adopting the Volcker rule, a centerpiece of the 2010 Dodd-Frank Act designed to prevent a repeat of the 2008 global credit crisis. The final version is also expected to extend the rule’s compliance dates.
If the regulators resolve such outstanding issues, such as whether the rule the strong enough, by next week, the rule would be on track to meet a self-imposed year-end deadline. Banks currently have until July 21 to implement the Volcker rule.
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Bank Groups Raise Concern About Lack of New FDIC Bank Charters
The Independent Community Bankers of America and the American Association of Bank Directors have expressed concern that the FDIC has approved one new bank charter since 2011, the groups said in a joint letter.
The Federal Deposit Insurance Corp.’s policy on so-called de novo banks, adopted in 2009, makes forming new banks prohibitive, according to the letter. The FDIC should review its policies on such applications, they said in the letter.
“We believe that there are less restrictive policies that will provide comfort to the FDIC and other bank regulators that de novo banks will not become a material risk,” they said in the statement.
Morgan Stanley Queried by SEC Over ‘Multiple’ Accounting Errors
The Securities and Exchange Commission asked Morgan Stanley (MS) about “multiple significant deficiencies” in its financial reporting after the firm corrected accounting errors involving loan cash flows, income taxes and derivatives contracts.
Morgan Stanley said that while its Sarbanes-Oxley program identified defects that affected risk assessment and monitoring controls, the “overall design and operation of its control framework” was effective, according to letters between the company and regulator that were released yesterday.
Deficiencies were caught in a “timely manner” and errors weren’t material, the New York-based firm said in the letters.
The SEC said its review was completed in an Oct. 17 letter.
Wesley McDade, a spokesman for Morgan Stanley in New York, declined to comment on the filings.
Commerzbank Raided in German Tax Probe Over Life Insurance
The lender isn’t a suspect and is cooperating with the authorities, Nils Happich, a spokesman for Commerzbank, said in an e-mailed statement yesterday. Prosecutors in Bochum, Germany, are investigating managers and staff of a non-German life insurance company that they didn’t identify, according to a statement on their website.
The suspects may have “helped German investors to evade tax since 2006 in more than 200 cases,” according to the prosecutors’ statement. “They may have sold life insurance that were veiled asset-management agreements.”
The tax evaded amounted to several hundred million euros, Germany’s Handelsblatt newspaper reported, citing finance industry officials it didn’t identify.
Madoff Behaved ’Like a Lunatic’ Over Feeder Probe, Jury Told
Bernard Madoff demanded his inner circle rush to re-create years’ worth of fake account documents for a feeder fund that in 1992 attracted unwanted attention from regulators, the con man’s ex-finance chief told a jury.
Madoff began swearing and “throwing himself around the office like a lunatic” after hearing Avellino & Bienes, a Florida investment firm that funneled money to his fraud, was being probed for failing to register its promissory notes as securities, Frank DiPascali, 57, told a jury in Manhattan federal court Dec. 2 at the trial of five former colleagues.
Annette Bongiorno, who ran Madoff’s investment advisory unit and is one of the defendants in the case, created fresh sets of fake stock purchases and randomized trading numbers for the new Avellino & Bienes statements and kept detailed notes of her efforts, said DiPascali, who pleaded guilty to aiding the fraud and is testifying in a bid for a lighter sentence.
DiPascali is the highest-ranking former Madoff executive to testify in the first criminal trial stemming from the Ponzi scheme, which deprived investors of $17 billion in principal.
The U.S. Securities and Exchange Commission started the investigation into Fort Lauderdale, Florida-based Avellino & Bienes, of which Madoff’s father-in-law was a founder, after receiving complaints that it might be a Ponzi scheme.
DiPascali pleaded guilty in August 2009 to 10 counts, including conspiracy, fraud and money laundering. He told U.S. agents that company employees asked him if the business was a “scam” before the world learned the truth, according to interview documents filed in the case.
Madoff, 75, is serving a 150-year sentence in a federal prison in North Carolina.
The case is U.S. v. O’Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).
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New Era in Responses to Activist Investing, White Says
U.S. Securities and Exchange Commission Chairman Mary Jo White talked about activist investing, corporate governance, proxy advising firms and industry regulations.
While differences of opinion still exist about shareholder participation in decision-making, most will agree that “the advice on how to respond to shareholder activism today is quite different from 30 years ago or even 10 years ago,” White said.
She spoke at a European Corporate Government Institute conference in Washington.
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