Political Donations, Anglo Irish Bank: Compliance

The chairman of a company that helps manage the Plaza Hotel in New York pleaded guilty to a scheme to raise illegal campaign contributions for political candidates using straw donors.

Sant Singh Chatwal, who has donated to Democrats including Hillary Clinton in his own name, pleaded guilty April 17 in federal court in Brooklyn, New York, to conspiring to violate federal campaign finance laws and to one count of witness tampering. Recipients of the donations weren’t identified in court.

Chatwal, 70, used “numerous straw donors,” including employees and contractors, to provide contributions in excess of federal limits, U.S. District Judge Leo Glasser said.

The businessman used the scheme to raise about $188,000 for at least three candidates from March 2007 to August 2011, prosecutors alleged.

Chatwal faces a maximum of 25 years in prison. Under a plea agreement, he may be sentenced to a little more than five years.

“Mr. Chatwal deeply regrets his actions and accepts full responsibility for the consequences,” Lesley Bogdanow, a spokeswoman for Chatwal with Sard Verbinnen & Co., said in a statement. “He looks forward to resolving this personal matter.”

The case is U.S. v. Chatwal, 14-cr-00143, U.S. District Court, Eastern District of New York (Brooklyn).

Gupta Agrees to Surrender to Prison Authorities on June 17

Rajat Gupta, the former Goldman Sachs Group Inc. director convicted in a 2012 insider trading scheme tied to the Galleon Group LLC hedge fund, agreed to surrender to prison authorities on June 17 to begin a two-year sentence, a federal judge in Manhattan said.

Gupta, 65, lost a bid for a new trial last month when a three-judge appeals panel upheld his conviction. U.S. District Judge Jed Rakoff said in an order made public April 17 that Gupta and prosecutors consented to the surrender date.

Gupta is the highest profile executive convicted since federal authorities in New York began a nationwide crackdown on insider trading at hedge funds in 2007. He was permitted to remain free on bail as he fought his appeal.

The case is U.S. v. Gupta, 11-cr-00907, U.S. District Court, Southern District of New York (Manhattan).

Former Anglo Irish Bank Executives Guilty on 10 Loan Charges

Two former Anglo Irish Bank Corp. executives were found guilty April 17 of allowing the lender to make loans to 10 clients to buy the company’s shares, the first convictions of bankers since the near collapse of the nation’s financial system.

A Dublin jury found Willie McAteer, the bank’s former finance director, and Pat Whelan, its onetime head of Irish lending, guilty of authorizing or permitting 450 million euros ($622 million) of loans to buy the shares, as executives sought to avoid a stake of about 28 percent flooding on to the market in 2008. The pair were cleared of six other charges.

Judge Martin Nolan will listen to arguments on sentencing on April 28. He said it’s unlikely he’ll make his decision that day. McAteer, 64, and Whelan, 52, declined to comment to reporters as they left court.

The verdicts came one day after Sean Fitzpatrick, the bank’s former chairman, was acquitted of similar charges. The case centered on loans to clients to buy Anglo Irish shares as the family of Sean Quinn, then Ireland’s richest man, was reducing its exposure to the nation’s third-biggest bank.

The two men were cleared of allowing illegal lending of 170 million euros to the Quinn family to buy some of the shares underpinning the position they built up through derivatives.

As the trial got under way almost three months ago, Whelan said that he helped put together the deal in the belief that the loans were part of the bank’s ordinary course of business. He said he understood that the nation’s financial regulator had agreed to the plan, and the company had “positive legal advice” that the loans could go ahead.

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RBS Abusive Lending Allegations Are Unfounded, Law Firm Says

Royal Bank of Scotland Group Plc didn’t deliberately push small businesses into default to buy their assets at a discount, according to a law firm hired by the lender to investigate the allegations.

Clifford Chance LLP found no evidence RBS engineered defaults or artificially distressed viable businesses, according to a report released April 17. The bank had no financial incentive to use excessive interest and fees to push companies into insolvency, the firm said after a review of 130 case files.

The U.K. Financial Conduct Authority is also investigating allegations that stem from a Nov. 25 report claiming Britain’s largest state-owned bank would charge companies advisory fees and buy their assets at reduced prices once they were in default. In January, the FCA appointed Promontory Financial Group LLC, a consulting firm, and the accountant Mazars to review RBS’s treatment of business customers.

Clifford Chance did criticize the bank for a lack of transparency on its fees. The Edinburgh-based bank said last week that it will clarify them and remove interest payments for the first 90 days when a customer defaults. RBS is also investigating customer allegations of aggressive behavior from staff. The law firm couldn’t review those claims due to lack of evidence, according to the report.

Christie Follows Bridge Report Tip to Appoint Impartial Reviewer

New Jersey Governor Chris Christie last week appointed an independent reviewer to investigate any suspected misconduct in his office, among the recommendations in an internal analysis of the George Washington Bridge traffic jams.

Patrick Hobbs, dean of Seton Hall University Law School in Newark, will serve in the new position of ombudsman, according to a news release from Christie’s office April 17. Hobbs, 54, is chairman of the State Commission on Investigation, created in 1968 to combat organized crime and political corruption.

The internal review of deliberate lane closings last year at the George Washington Bridge placed the blame on Bridget Anne Kelly, a onetime Christie deputy chief of staff, and David Wildstein, a former director of interstate capital projects for the Port Authority of New York and New Jersey, which operates the bridge.

High-Frequency Trading

SEC Said to Weigh Shining Light on Broker Role in Routing Stocks

The U.S. Securities and Exchange Commission is weighing a requirement that brokers tell investors exactly where their stock trades go to be executed, a proposal that may address complaints that the decisions are sometimes made against the client’s best interests.

The proposal could give investors more insight into whether they are getting the best price when they buy and sell large numbers of shares, according to three people familiar with the matter. Brokers entrusted with orders in the U.S. stock market can choose from dozens of exchanges and private venues. Some money managers such as T. Rowe Price Group Inc. (TROW) have told regulators that incentives offered by exchanges for attracting orders can put a broker’s financial interest at odds with the customer’s.

The SEC faces pressure to overhaul trading after Michael Lewis’s “Flash Boys” book made the claim that high-frequency traders hurt other investors by learning which shares investors plan to buy, purchasing them and selling them back at a higher price. The SEC has said it’s reviewing every aspect of how stocks are traded, and regulators are trying to identify changes that could be implemented quickly, the people said.

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BofA, NYSE Sued by R.I. City Over High-Frequency Trading

Bank of America Corp. and the New York Stock Exchange were among dozens of exchanges, brokerages and traders sued over high-frequency trading by the city of Providence, Rhode Island, over claims they rigged securities markets to divert billions of dollars from buyers and sellers of shares.

The lawsuit filed April 18 is one of the first by an institutional investor since U.S. Attorney General Eric Holder in March promised Congress a full investigation into whether high-frequency traders violated laws against trading on inside information.

One defendant in Providence’s complaint, Virtu Financial Inc., a high-frequency trader that delayed its initial public offering, has received inquiries from the office of New York’s attorney general, Eric Schneiderman, according to a person familiar with the matter. Schneiderman announced last month that he’s investigating high-frequency traders.

The Federal Bureau of Investigation has said it’s looking into whether firms that engage in high-speed trades get an improper jump on other investors by using information about their trading to make profits.

Lawrence Grayson, a spokesman for Charlotte, North Carolina-based Bank of America, declined to comment on the suit. Eric Ryan, a spokesman for the New York Stock Exchange, and Virtu Financial president Christopher Concannon didn’t immediately respond after regular business hours to voice-mail messages seeking comment.

The case is City of Providence, Rhode Island v. Bats Global Markets Inc., 14-cv-02811, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Ellen Rosen in New York at erosen14@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Fred Strasser at fstrasser@bloomberg.net; Charles Carter at ccarter12@bloomberg.net Stephen Farr

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