NYSE Retail Plan, Japan Probe, Intel Appeal: Compliance

The New York Stock Exchange’s plan to lure more stock orders from individuals was approved by the U.S. Securities and Exchange Commission, dealing a setback to Wall Street firms that increasingly keep the business for themselves.

NYSE Euronext said in a statement the program will start Aug. 1. The company sought permission in October for the one-year pilot to lure orders by offering retail brokers potentially better prices than are available elsewhere. Under the plan, a class of retail liquidity provider at the NYSE would be allowed to reserve and keep hidden bids and offers for smaller investors as long as the prices beat those in the rest of the market.

The exchange operator’s program may help it attract orders that otherwise would be retained by financial firms and matched through a process known as internalization. NYSE market share of trading in companies it lists has fallen to less than 25 percent in May from 82 percent in 2003, data compiled by Bloomberg and Barclays Plc show.

Joseph Mecane, executive vice president and chief administrative officer for U.S. markets at NYSE Euronext, said in an interview with Bloomberg News that the company expects the program to result in more liquidity and better prices flowing back to retail customers.

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Compliance Policy

EU Parliament Committee Postpones Vote on Financial Markets Law

The European Parliament’s economic and monetary affairs committee has postponed voting on a draft financial markets law until September at the earliest, Sharon Bowles, the panel’s chairwoman, said by e-mail yesterday.

The committee had been scheduled to vote on the law, known as Mifid, next week, according to the parliament’s website. The delay allows more time for the assembly’s political groups to broker compromises on the legislation.

The Mifid law, proposed last year, must be approved by the parliament and national governments before it can enter into force.

Separately, the European Commission adopted technical rules governing short-selling and credit-default swaps on sovereign debt, the commission said in a statement.

The European Union also approved a law to toughen regulation of over-the-counter derivatives. The legislation will require standard forms of OTC derivatives to be traded through clearinghouses, and to be logged in trade repositories.

The law was agreed on by the bloc’s national governments and by lawmakers in the European Parliament in February, the EU said in an e-mailed statement.

Euro Finance Chiefs to Seek Political Accord on Spain Bailout

Euro-area finance ministers will seek a political endorsement of a Spanish bank bailout agreement when they convene in Brussels on July 9.

The ministers will also discuss Greece’s implementation of measures required under a second international rescue program and the situation in Cyprus, which has also sought aid, according to an e-mailed statement distributed today by the Luxembourg government.

Finra Requests Comment on Proposed Crowdfunding Activities Rule

The Financial Industry Regulatory Authority is seeking comment on how its rules should apply to brokerages involved in sales of securities through so-called crowdfunding, according to a statement on its website.

Crowdfunding, a practice that lets startup companies raise capital through social-networking platforms such as Facebook Inc. and Twitter Inc., is permitted under U.S. legislation signed into law in April.

The law requires intermediaries to register with the Securities and Exchange Commission as a “funding portal” and to sign up with an applicable self-regulatory organization such as Finra, Finra said.

Germany Wants More Control of High-Frequency Trading, HB Reports

Germany’s Finance Minister Wolfgang Schaeuble wants more control over high-frequency trading to minimize risks to the financial system, Handelsblatt reported, citing a draft law.

High-frequency trading accounts for 40 percent of total trading volumes in Germany, Handelsblatt reported, citing Bundesbank estimates.

Compliance Action

French Banks Settle With Competition Authority on Payment Fees

French banks reached an agreement with the national competition regulator to end a probe into interbank commissions applied to electronic withdrawals and other means of automatic payments, the agency said in a statement yesterday.

The main interbank fees targeted by the regulator will be cut in half by Sept. 1 and eliminated a year later, according to the online statement.

Japan’s DPJ Urges Insider-Trading Probe of 20 Offerings

Japan’s ruling party urged regulators to pursue a wider investigation of insider trading after finding spikes in transaction volumes of 20 stocks before public offerings.

The Democratic Party of Japan asked the Tokyo Stock Exchange to provide a list of the 10 investors who sold the most shares the day before the companies announced issuances between July 2009 and July 2011, said Tsutomu Okubo, head of a party panel studying the issue.

Lawmakers are examining whether insider trading before stock sales is more widespread than the cases involving four offerings uncovered by regulators since March. The crackdown has centered on short-selling based on tips provided by underwriters including Nomura Holdings Inc., which last week suspended some businesses and cut top executives’ pay over the scandal.

Financial Services Minister Tadahiro Matsushita this week called on 12 local brokerages to review how they handle confidential data. The Tokyo Stock Exchange plans to inspect about 30 Japanese and foreign brokerages to determine how they guard information, a senior bourse official said last month.

Separately, Japan’s banking regulator asked a dozen securities firms to check whether they leaked information to hedge fund adviser Japan Advisory Ltd., as part of a government probe into insider trading.

The Financial Services Agency made the request this week as part of its call on the 12 brokerages including Nomura and Goldman Sachs Group Inc. to review how they handle private information, Financial Services Minister Tadahiro Matsushita said at a news conference in Tokyo today.

The FSA suspects Japan Advisory sought information from brokerages on forthcoming share sales in exchange for high commissions, the Nikkei newspaper reported today, without attribution. Japan is attempting to restore confidence in the country’s financial markets by cracking down on short-selling based on tips from underwriters of public offerings.

Calls to a spokesman at Nomura weren’t immediately returned. Hiroko Matsumoto, a spokeswoman for Goldman Sachs in Tokyo, declined to comment. Edward Brogan, head of Japan Advisory, didn’t immediately reply to an e-mail or answer phone calls.

Goldman Adds Structured Note Value Disclosure After SEC Request

Goldman Sachs Group Inc. has begun disclosing its own valuations for structured notes in offering prospectuses, after the U.S. Securities and Exchange Commission recommended that banks include such an estimate.

The U.S. regulator advised banks to add “fair value” disclosures in a letter to lenders it didn’t identify that was posted on its website April 13.

In a May 15 offering from Goldman Sachs of “Absolute Return Knock-Out Notes,” the bank wrote that the securities are “equal to approximately $960 per $1,000” note issued. A similar May 4 deal lacked such details, instead using language that the price received for the notes may be “significantly less than the original issue price,” according to prospectuses filed with the SEC.

The bank’s earliest use of valuation estimates was in mid-May, according to a search of SEC records online.

Tiffany Galvin, a New York-based spokeswoman for Goldman Sachs, declined to comment.

The U.S. structured-note industry has come under scrutiny from regulators for the securities’ complexity and lack of transparency.


Intel Calls EU Case for $1.3 Billion Fine ‘Utterly Hopeless’

Intel Corp.’s 1.06 billion-euro ($1.3 billion) fine for using rebates to block rivals is based on an “utterly hopeless” and untenable case by European Union regulators, company lawyers told an EU appeals court.

The 2009 decision by the EU’s antitrust regulator was based on claims that are “utter nonsense,” an Intel lawyer told the EU General Court in Luxembourg. Claims that Intel made payments to Lenovo Group Ltd. to cut Advanced Micro Devices Inc. out of the market are baseless and should be overturned.

Nicholas Green, a lawyer for Intel, made the remarks at the EU’s second-highest court yesterday on the third day of the hearings, which are scheduled to conclude today.

The EU probe concluded Intel impeded competition by giving computer makers rebates from 2002 until 2005 on the condition that they buy at least 95 percent of their chips for personal computers from the Santa Clara, California-based company. Intel imposed “restrictive conditions” for the remaining 5 percent, supplied by AMD, which struggled to overcome Intel’s hold on the PC processor market, the EU said. The infringement continued until at least December 2007, the EU said.

The 2006 payments “were to win business, not to cancel a launch” of AMD-based notebooks, Intel’s lawyer Green said.

The commission said evidence showed the deal hinged on exclusivity.

Any decision by the EU General Court can be appealed to the EU Court of Justice in Luxembourg.

The case is T-286/09 Intel Corp. v. Commission.

Axius CEO Kaufmann Indicted in Alleged Scheme to Bribe Brokers

Axius Inc. Chief Executive Officer Roland Kaufmann was indicted on charges he participated in a scheme to bribe brokers and manipulate the share price of the Dubai-based company.

Kaufmann, 60, was charged in an indictment filed yesterday in federal court in Brooklyn, New York. He was charged with conspiracy to commit securities fraud, wire fraud, money laundering and other crimes. Jean-Pierre Neuhaus, 55, a Swiss financial professional, was also named in the filing.

No Axius investors were defrauded in the undercover operation, the Justice Department said in the statement. The U.S. Securities and Exchange Commission filed a related civil enforcement action against both men yesterday, prosecutors said.

Robert Nardoza, a spokesman for U.S. Attorney Loretta Lynch in Brooklyn and, Josef Klazen, a lawyer for Kaufmann, didn’t immediately return voice-mail messages after regular business hours yesterday seeking comment on the indictment.

Interviews: Libor Probe

Balls Slams Osborne for ‘Utterly False’ Libor Comments

Ed Balls, the U.K. Labour Party’s top Treasury spokesman, accused U.K. Chancellor of the Exchequer George Osborne of “utterly false and untrue” allegations linking Balls to Libor rigging.

Osborne also spoke in this report. The exchange took place during a House of Commons debate on whether there should be a judge-led probe on the rate-fixing scandal.

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Large Banks ‘Fraught With Conflicts,’ Schlosstein Says

Ralph Schlosstein, president and chief executive officer of Evercore Partners Inc., talked about the broadening investigation into alleged collusion by banks in setting interbank lending rates, public and investor confidence in the financial system, and the outlook for industry regulation.

Schlosstein, who spoke with Erik Schatzker and Trish Regan on Bloomberg Television’s “Market Makers,” also discussed the U.S. economy and Evercore’s performance. Arthur Levitt, former chairman of the U.S. Securities and Exchange Commission and a Bloomberg LP board member, also spoke.

For the Schlosstein video, click here.

Separately, Levitt also talked about the credibility of the London interbank offered rate and Barclays Plc’s rate-rigging scandal.

For the Levitt video, click here.

Cohan Calls Libor Scandal ‘Wildfire’ That Could Spread

William Cohan, author of “Money and Power: How Goldman Sachs Came to Rule the World” and a Bloomberg View columnist, talked about Barclays Plc’s Libor-rigging scandal and its implications for other banks.

Cohan spoke with Tom Keene, Scarlet Fu and Sara Eisen on Bloomberg Television’s “Surveillance.”

For the video, click here.

Skidelsky Says Libor Rigging Shows Banks Lack Integrity

Robert Skidelsky, a member of the U.K. House of Lords, talked about the culture in London’s financial services industry amid interest-rate rigging by banks.

He spoke with Maryam Nemazee on Bloomberg Television’s “The Pulse.”

For the video, click here.

Comings and Goings

Champ Will Succeed Rominger as SEC Investment Management Chief

Norm Champ, a former general counsel to hedge-fund manager Chilton Investment Co., was appointed director of the U.S. Securities and Exchange Commission’s Investment Management unit, the agency said yesterday.

Champ, who joined the SEC in 2010 as associate regional director for examinations in its New York office, will succeed former Goldman Sachs Group Inc. executive Eileen Rominger, who is retiring, the agency said in an e-mail statement. Champ will assume his new duties on July 9, the SEC said.

The office Champ will lead is responsible for promoting capital formation through oversight and regulation of the multitrillion-dollar investment management industry, the SEC said in its statement.

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