U.K. Stocks, Power-Tax Rebates, Bonus Remarks: Compliance

Britain’s markets regulator should investigate whether the closing prices of stocks are being manipulated, according to lawmakers.

Conservative Mark Garnier pressed for the investigation by the Financial Conduct Authority at a July 3 hearing of the Treasury Committee in London.

“This is something which is very widely spoken about among equity traders,” Garnier said at the hearing. “This is not a minor thing. This is a big deal.”

David Bailey, head of markets infrastructure and policy at the FCA, said he was unaware of any investigations into closing prices and said he’ll report to the committee when he had more information.

Regulators around the world are grappling with a widening list of benchmarks that have been, or are claimed to have been, manipulated by traders at banks for their own profit.

The U.K. regulator, which fined Barclays Plc (BARC) 26 million pounds ($44.6 million) in May after finding that a gold trader had artificially suppressed the metal’s price to cheat a client in 2012, is also scrutinizing how gold prices are set.

The FCA will join representatives from producers, refiners and exchanges who have been invited to a meeting of the World Gold Council this week in London to discuss how to improve the process.

Compliance Policy

Almunia Leaves Door Open for Recovery of German Power-Tax Aid

Joaquin Almunia, the European Union’s competition commissioner, kept open the possibility of companies that gained from previous discounts on German environmental taxes having to pay back their aid.

Almunia said July 3 he never promised there would be no repayment of tax rebates for companies that use large amounts of energy if the rebates are found to be illegal under the bloc’s state subsidy rules.

The European Commission in December opened a review of the German discounts on environmental taxes. Heavy energy-users include ThyssenKrupp AG and Bayer AG.

The amount of recovery, in the event a subsidy is found to be illegal, is under discussion, Almunia said.

Courts

U.S. House Says Staff ‘Absolutely Immune’ to SEC Subpoena Demand

The U.S. House Ways and Means Committee and a top staff member say the panel and its employees are “absolutely immune” from having to comply with subpoenas from a federal regulator in an insider-trading probe.

The committee July 4 responded to U.S. District Court Judge Paul Gardephe’s order to explain why it hadn’t complied with the U.S. Securities and Exchange Commission’s requests for documents, phone records and testimony of aide Brian Sutter for more than a year. Gardephe gave the House until July 4 to answer.

Kerry W. Kircher, the top lawyer for the House, said the SEC’s request should be dismissed because the information it seeks concerns legislative activities protected by the Constitution, which can’t be reviewed by federal judges. If Gardephe won’t dismiss the SEC’s case, it should be transferred to federal court in Washington, Kircher said.

Kircher described the document request in a court filing as “a remarkable fishing expedition” for core legislative records.

The SEC sought the subpoenas in an investigation testing the limits of federal insider-trading laws on whether the committee or staff members illegally passed on non-public information about a change in U.S. health-care policy.

John Nester, a spokesman for the SEC, declined to comment on the House’s filing.

The case is SEC v. The Committee on Ways and Means of The U.S. House of Representatives and Brian Sutter, 14-mc-00193, U.S. District Court Southern District of New York (Manhattan).

Rengan Rajaratnam Judge Refuses to Dismiss Conspiracy Charge

The judge overseeing Rengan Rajaratnam’s insider-trading trial denied a defense request to dismiss the last remaining charge of conspiracy a day after she narrowed the case by rejecting two fraud counts.

U.S. District Judge Naomi Reice Buchwald in Manhattan said July 2 at a hearing outside the jury’s presence that the trial of the younger brother of imprisoned hedge fund manager Raj Rajaratnam would go forward.

At the end of the government’s direct case July 1, Buchwald dismissed two securities-fraud counts. The ruling was a victory for Rengan Rajaratnam, since the top penalty for securities fraud is 20 years in prison and the maximum sentence for conspiracy is five years.

Rengan Rajaratnam, who worked his way up through Steven A. Cohen’s SAC Capital Advisors LP and became a portfolio manager at Galleon Group LLC, the hedge fund co-founded by his brother Raj, is accused of conspiring with the brother and two others to trade illegally in stocks including Advanced Micro Devices Inc. (AMD)

The government can’t appeal Buchwald’s dismissal of the fraud counts.

Raj Rajaratnam is serving a 11-year prison term for insider trading.

The case is U.S. v. Rajaratnam, 13-cr-00211, U.S. District Court, Southern District of New York (Manhattan).

Interviews/Commentary

Obama Renews Attack on Wall Street Banker Bonuses

Michael Shaoul, chairman and chief executive officer at Marketfield Asset Management LLC, and Bloomberg’s Max Abelson discussed President Barack Obama’s renewed criticism of the bonus culture at Wall Street banks. They spoke on “Bloomberg Surveillance.”

For the video, click here.

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

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Charles Carter, David Glovin

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