FBI Solyndra Probe, Cephalon Subpoena, Barclays: Compliance

Solyndra LLC, the solar-panel maker that filed for bankruptcy protection two months after executives extolled its prospects, is being investigated by the FBI for accounting fraud, an agency official said.

The FBI is examining possible misrepresentations in financial statements submitted to the Energy Department, according to the official, who requested anonymity because the investigation is continuing.

When construction started, the company said it had a $2 billion backlog in orders for its cylindrical solar modules for commercial rooftops.

“The company is not aware of any wrongdoing by Solyndra officers, directors or employees” related to the Energy Department loan guarantees or other actions and “is cooperating fully” with the U.S. Attorney in San Francisco, according to a Sept. 20 statement from Solyndra. David Miller, a company spokesman, didn’t return a phone call and an e-mail seeking comment Sept. 29.

Solyndra filed for bankruptcy protection on Sept. 6 and fired about 1,100 workers with little notice, two years after it received the loan guarantee. The Federal Bureau of Investigation raided the company’s offices on Sept. 8. The Justice Department hasn’t said why Solyndra is being probed.

Solyndra was the first to receive a guarantee under the stimulus act. Its loan was the largest award given to a solar manufacturer under the program.

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Compliance Policy

SEC Says Large Rating Firm May Have Leaked Pending Rate Move

U.S. Securities and Exchange Commission inspectors said a large credit-rating firm’s procedures “appeared to allow” for a pending rating decision to be disclosed to certain people before the action was publicly announced.

The findings, based on inspections conducted in 2009 and 2010, were part of the SEC’s first annual report on credit-rating firms mandated by the Dodd-Frank Act. Carlo di Florio, head of the Office of Compliance Inspections and Examinations, declined to identify any of the firms referenced in the report.

Regulators are evaluating credit-rating firms’ policies to determine whether firms have provided some investors more information than others, the report said.

The report highlights issues similar to those at the center of a review of whether Standard and Poor’s employees improperly gave certain investors information about its decision to downgrade U.S. debt before doing so on Aug. 5, according to a person with direct knowledge of the matter. The U.S. downgrade occurred more than a year after the period covered by the SEC report.

SEC inspectors have examined whether meetings between S&P staff and certain investors to discuss the possible rating cut violated rules that prohibit confidential information from being disclosed selectively to some market participants, according to the person with direct knowledge of the matter.

The SEC staff also said in the report on the industry that credit-rating firms sometimes failed to follow their own ratings processes, make accurate disclosures or manage conflicts of interest.

The 10 firms registered with the SEC as nationally recognized statistical ratings organizations, or NRSROs, have already begun responding to recommendations in the Sept. 30 report.

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NCG, Catalunya Banc, Unnim Banc Get Temporary Approval for Aid

Spanish lenders NCG Banco, Catalunya Banc and Unnim Banc, which were created this year as part of the restructuring of Spain’s savings bank system, won temporary European Union approval for their recapitalizations.

Final approval by the European Commission, the 27-nation EU’s executive agency, depends on the submission of a restructuring plan “that ensures that the banks will be viable in the long-term, that shareholders adequately share the burden of restructuring and that distortions of competitions are limited,” the Brussels-based regulator said.

Barnier Prefers German, Swedish Bank Laws, FinansWatch Says

Michel Barnier, the European Union’s financial services commissioner, said he has mainly been inspired by Swedish and German bank rescue laws for the joint draft legislation that the commission will soon present, according to an interview published by Copenhagen-based news agency FinansWatch.

New York Fed May Demand Liquidity Reports From European Banks

The Federal Reserve Bank of New York may ask foreign lenders for more detailed daily reports on liquidity as the U.S. steps up monitoring of risks from Europe’s sovereign debt crisis, according to two people with knowledge of the matter.

Regulators held informal talks with some of the largest European lenders about producing a “fourth-generation daily liquidity” or 4G report, according to the people, who asked for anonymity because communications with central bankers are confidential. The reports may cover potential liabilities such as foreign-exchange swaps and credit-default swaps, said one person. The U.S. has already increased the number of examiners embedded in these banks, the person said.

Concern is growing that European lenders may falter as Greece teeters on the brink of default. U.S. Treasury Secretary Timothy F. Geithner has warned that failure to bolster European backstops would threaten “cascading default, bank runs and catastrophic risk” for the global economy.

U.S.-based money funds, which buy short-term commercial paper, have been shunning securities issued by some banks based on the continent, and European Central Bank Governing Council member Yves Mersch said Sept. 28 that liquidity shortages pose the main risks to the region’s banking system.

Jack Gutt, a spokesman for the Federal Reserve Bank of New York, declined to comment.

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FSA Announces Re-Start of the FSCS Funding Model Review

The Financial Services Authority said it is restarting a review of deposit guarantees and will issue a consultation paper next year.

The deposit guarantee previously was increased in 2010 by the FSA, according to its website.

Personal-Banking Fees May Face Disclosure Rules, Barnier Says

The European Union is ready to draft rules to make personal-banking fees easier to compare if self-regulation by banks fails “to deliver satisfactory results,” EU Financial Services Commissioner Michel Barnier said.

“The European Commission is well aware that the current structure and disclosure of bank fees hinder the price transparency of financial services, thus making it difficult for consumers to understand and compare offers,” Barnier said in an answer to a parliamentary question dated Sept. 29.

“The European Commission has already informed the industry of its readiness to launch the necessary preparations for regulating through legislation the transparency of bank fees,”

EU Consults on Wholesale Pricing for Network Access

The European Commission is seeking views on regulation of wholesale pricing for access to phone networks based on copper and fiber lines.

The Brussels-based authority said it may draft recommendations to national telecommunications regulators who “are currently taking different approaches when they choose to regulate in these fields,” said commissioner Neelie Kroes, responsible for the region’s Digital Agenda, according to the manuscript of a speech planned for today in Brussels.

Compliance Action

Cephalon Gets U.S. Justice Department Subpoena for Top Sellers

Cephalon Inc. received a subpoena from the U.S. Justice Department asking for information about the marketing of Nuvigil and Provigil, the company’s best-selling medicines to promote wakefulness.

Cephalon, based in Frazer, Pennsylvania, said it will fully cooperate and is responding to the request, which was disclosed in a filing with the U.S. Securities and Exchange Commission.

Nuvigil is the subject of a $3.6 million radio campaign by Cephalon, as reported by Bloomberg Businessweek in August. The advertising promotes the drug’s ability to help shift workers stay alert on the job without impeding their ability to sleep during the day. The company also is spending $490,000 on an Internet campaign featuring the “Wake-Up Squad” and informational booths at community events to promote Nuvigil.

The subpoena focuses on a “limited number” of promotional activities that the company fully vetted to make sure they complied with all laws and regulations, said Natalie deVane, a company spokeswoman, in an e-mailed statement. Cephalon has fulfilled all of the requirements under a five-year corporate integrity agreement it entered into in 2008 and will continue to do so, she said.

Cephalon lost a bid in 2010 to dismiss antitrust lawsuits, including one by the U.S. Federal Trade Commission.

Deutsche Telekom Faces Criminal Investigation Over Data Costs

Deutsche Telekom AG, Europe’s biggest phone company, is facing a criminal investigation by German prosecutors over allegations the company illegally overcharged competitors for data.

A formal probe was opened in the case, Angela Wilhelm, spokeswoman for Bonn prosecutors, said in a telephone interview Sept. 30. No suspect has yet been named, she said. The case was prompted by a June complaint by German law firm Wilms & Schaub Rechtsanwaltsgesellschaft mbH seeking a probe into whether Deutsche Telekom managers fraudulently withheld information about the cost of directory data.

As Germany’s former phone monopoly, Deutsche Telekom is required to share directory data with competitors. Since the opening of the telecommunications market in the 1990s, the company has been involved in about 60 civil lawsuits over the price it charges for subscriber data, according to Wilms & Schaub.

In the complaint, Wilms & Schaub alleges that Deutsche Telekom for years overcharged its competitors in the directory and phone-book market claiming “unsubstantiated” costs.

Philipp Blank, a spokesman for Bonn-based Deutsche Telekom, said a similar complaint was filed in 2006 and the case was dropped shortly thereafter.

Barclays Ordered to Halt Part of Japan Brokerage for 10 Days

Barclays Plc was ordered to suspend part of its Japan brokerage business for 10 days after breaching Japanese securities rules, the country’s finance regulator said.

The Financial Services Agency’s suspension will take place from Oct. 11 to Oct. 24, the regulator said in a statement. The regulatory action affects the London-based company’s equity trading in Japan between Barclays’s affiliated companies, the agency said.

The violation took place after Barclays failed to report short-sale transactions properly to the Osaka Securities Exchange, the agency said in a statement to its website. The FSA also ordered Barclays to submit a report to the regulator by Oct. 21 detailing who is responsible for the violation and how it will prevent another occurrence.

Barclays “will enhance further our compliance processes and governance to prevent such an error from reoccurring,” the brokerage said in a statement e-mailed to Bloomberg News.

U.K. Insurers to Get Break on Sharing Price Data After Probe

Seven U.K. insurers including Aviva Plc, RBS Insurance Group Ltd. and RSA Insurance Group Plc will get to share more recent policy-price data if Britain’s antitrust regulator agrees to back off limits it set during an investigation.

The companies, probed over their use of computer programs that allowed them to view each other’s data, may share car-insurance prices that are six months old under the proposed change, instead of a 36-month limit agreed to in January, the U.K. Office of Fair Trading said Sept. 30 in a statement posted on its website. A comment period on the proposed change to the accord ends on Oct. 28.

None of the insurers or software companies was cited as breaching competition law or accused of price fixing by the OFT.

Popolare Emilia to Meet Basel 3 Targets in Advance, Il Sole Says

Banca Popolare dell’Emilia Romagna Scrl plans to meet its Basel 3 targets seven years in advance through early conversion of a bond and the absorption of minority stakes, Il Sole 24 Ore reported, without saying where it got the information.

The moves will lift Popolare dell’Emilia’s core Tier 1 ratio above 7 percent, the newspaper said.


Levitt Says ATM Fees May Rise Because of Dodd-Frank

Arthur Levitt, a former chairman of the U.S. Securities and Exchange Commission, said an unintended consequence of the Dodd-Frank financial reform legislation may be $5 ATM fees.

Levitt talked with Bloomberg’s Ken Prewitt and Tom Keene on Bloomberg Radio’s “Bloomberg Surveillance.”

For the audio, click here.

Transaction Tax Needs ‘National Level’ Design, Re-Define Says

European Union proposals for a financial-transaction tax would be more likely to succeed if pursued on a country-by-country basis, said Sony Kapoor, managing director of policy group Re-Define Europe.

Reaching an agreement among the 27 EU member states, or even the 17 nations of the euro area, is likely to be impossible, Kapoor said in an interview in Brussels. To have any chance of passage, tax proposals need to be targeted at only those countries interested in such an effort, he said.

“Having a design that deliberately is set up to be possible at a national level is the only sensible thing to do, if indeed you are serious about such a proposal, as at least the president of the European Commission seems to be,” Kapoor said.

The EU last week proposed a financial-transaction tax to start in 2014, saying it could raise 57 billion euros ($77 billion) a year to aid national and regional budgets.

Britain, home to Europe’s biggest financial center, and the Netherlands criticized the plan as unworkable, particularly if it isn’t enacted on a global basis. It is “no good at all” and would affect the competitiveness of the EU, Dutch Deputy Finance Minister Frans Weekers told lawmakers Sept. 29.

The proposal would apply a levy of 0.1 percent on trading of stocks and bonds, with a 0.01 percent rate for derivatives contracts, according to the commission, the EU executive.

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