Ireland Experian Probe, Copper ETF, JPMorgan: Compliance

Experian Plc, the credit-reporting service with financial information on more than 740 million consumers, is being investigated by Irish regulators in the wake of a series of breaches of the company’s databases.

The Office of the Data Protection Commissioner in Ireland has opened a preliminary inquiry into the security practices of Dublin-based Experian, said Gary Davis, the agency’s deputy commissioner. The move was prompted by an Oct. 29 story on’s Tech Blog showing that Experian’s database was invaded at least 80 times, leading to the theft of almost 15,500 credit reports since 2006, he said. Hackers infiltrated Experian using passwords stolen from its customers, and invasions weren’t immediately detected.

Regulators have asked Experian whether breaches have affected Irish consumers or businesses, and requested information on what steps the company is taking to prevent unauthorized access to its databases and safeguard records from hackers, Davis said.

Gerry Tschopp, a spokesman for Experian, declined to comment directly on the Irish inquiry. The breaches were “isolated security issues experienced by a small number of our clients in North America involving U.S. consumers under U.S. data-protection jurisdiction,” Tschopp said in an e-mailed statement.

The U.S. Federal Trade Commission as a policy won’t confirm or deny investigations, said Laura Berger, a senior attorney in the division of privacy and identity protection.

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Compliance Policy

Spain Cash-Transaction Ban Begins as Rajoy Targets Tax Fraud

Spain began prohibiting consumers from paying cash to settle bills of 2,500 euros ($3,190) or more in legislation designed to curb tax evasion.

The ban, which became effective today, will be applied when at least one party to a transaction acts in a professional or commercial capacity, according to a law published Oct. 30 that contains a series of measures it says are “designed to prevent and fight against tax fraud.”

Outlawing certain cash transactions that are commonplace across the country, such as paying a carpenter for home remodeling, is the latest in a series of revenue and spending changes that Prime Minister Mariano Rajoy has pushed in a bid to close the budget deficit and avert the need for a second bailout.

Article 7 of law 7/2012 targets the custom of paying cash for goods and services to avoid value-added and income taxes. Economists say the practice is particularly widespread in Spain, a country tax inspectors estimate is one of the European Union’s largest generators of undeclared earnings.

Italy imposed a law limiting cash transactions last year.

Spain’s underground economy is worth about 245 billion euros, or 23 percent of gross domestic product, according to a report this month from the Spanish tax inspectors union Gestha. That’s about 10 percentage points more than the EU average, it said.

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Copper Users Say ETF Study for SEC Shows Inaccurate Price Impact

A group of industrial copper users called a study by a unit of the U.S. Securities and Exchange Commission “inaccurate and incomplete” for concluding there was little link between asset flows and commodity prices.

Vandenberg & Feliu, a New York based law firm representing a group that includes AmRod Corp., Southwire Co. and Encore Wire Corp., responded to the study in an SEC filing Nov. 16. An earlier review by the regulator of JPMorgan Chase & Co.’s plan for a copper-backed fund concluded that asset flows from exchange-traded products tied to metals don’t have a significant impact on the price of the commodity.

The copper-users group and at least one U.S. lawmaker oppose the plan, saying it would disrupt metal supplies and drive up prices.

IOSCO Seeks More Transparency on Securitizations

The International Organization of Securities Commissions published recommendations for greater transparency and more robust regulation of securitized debt.

IOSCO said issuers of securitized debt instruments should retain some of the risk of losses.

The group published the recommendations on its website Nov. 16.

Shadow Banking Grows to $67 Trillion Industry, Regulators Say

The shadow banking industry has grown to about $67 trillion, $6 trillion bigger than previously thought, leading global regulators to seek more oversight of financial transactions that fall outside traditional oversight.

The size of the shadow banking system, which includes the activities of money market funds, monoline insurers and off-balance sheet investment vehicles, “can create systemic risks” and “amplify market reactions when market liquidity is scarce,” the Financial Stability Board said in a report published on its website, which utilized more data than last year’s probe into the sector.

While watchdogs have reined in excessive risk-taking by banks in the wake of the collapse of Lehman Brothers Holdings Inc. in 2008, they are concerned that lenders might use shadow banking to evade the clampdown. Michel Barnier, the European Union’s financial services chief, is planning to target money market funds in a first wave of rules for shadow banks next year.

The FSB also targeted repurchase agreements and securities lending for tougher rules.

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Compliance Action

JPMorgan Joins Credit Suisse in Settling SEC Mortgage Inquiries

JPMorgan Chase & Co. and Credit Suisse Group AG agreed to pay more than $416 million to settle U.S. regulatory claims they misled investors while selling billions of dollars of investments linked to home loans.

JPMorgan, which will pay $296.9 million, resolved claims that it made misstatements about delinquency data for loans packaged into securities and that Bear Stearns Cos., which the bank acquired in 2008, didn’t tell investors it kept reimbursements on soured loans, the Securities and Exchange Commission said Nov. 16 in a statement. Credit Suisse, which is paying $120 million, was also faulted for disclosures on reimbursements.

The SEC is seeking to wrap up probes into how banks bundled and pitched investments tied to risky home loans. JPMorgan already has been sued by state and federal watchdogs over sales of mortgage-backed securities to Fannie Mae and Freddie Mac and loans sold to investors by Bear Stearns.

JPMorgan and Credit Suisse didn’t admit or deny wrongdoing in settling the agency’s claims.

“The SEC’s complaint makes allegations under the negligence-based provisions of the federal securities laws and does not include charges of intentional misconduct,” New York-based JPMorgan said in a statement.

“Credit Suisse is committed to the highest standards of integrity and regulatory compliance in all its businesses,” the Zurich-based company said in a separate statement.

The case is Securities and Exchange Commission v. JPMorgan Securities LLC, 12-cv-01862, U.S. District Court, District of Columbia (Washington).

CFPB Gives Industry More Time For Dodd-Frank Disclosures

The Consumer Finance Protection Bureau has extended the time for complying with new mortgage disclosures rules, according to a statement issued by the agency Nov. 16.

Additional mortgage disclosure requirements on cancellation of escrow accounts, consumer liability for debt payments after foreclosure, and revealing the creditor’s policy for accepting partial payment, won’t be required by Jan. 21, the consumer bureau said in the statement.

Instead, the requirements will come after previously proposed mortgage disclosure rules are made final.

Nexans CEO Says EU Antitrust Fines Harm European Competitiveness

Nexans SA Chief Executive Officer Frederic Vincent, whose company is under investigation by the European Commission over price-fixing allegations, said the antitrust regulator puts the bloc’s companies at a disadvantage in a global market.

Vincent made the remarks by telephone Nov. 16.

U.S. penalties are “about a third” of those in the European Union and there are minimal sanctions in Asian countries like India, China, Japan and Korea, Vincent said.

Nexans, the world’s second-biggest cable-maker, won a partial victory last week against the commission, the EU’s executive arm. The EU General Court ruled on Nov. 14 the commission erred by collecting too much data in 2009 raids of Paris-based Nexans, Italian rival Prysmian SpA and others. Agents were looking into fixing-prices allegations for undersea and underground high-voltage power cables.

Nexans, like Prysmian, has booked a 200 million-euro ($254 million) provision for a potential EU fine. The commission may rule next year, he said.

Vincent is lobbying in French economic and political circles to curb the commission’s powers, he said, saying its work should come under legal supervision.

Portugal’s CMVM Says Decision on Brisa Delisting Not Imminent

Portuguese securities regulator CMVM has yet to decide on a request by Brisa-Auto Estradas de Portugal SA shareholder Tagus Holdings Sarl to withdraw the toll-road operator from the stock market.

A decision by the regulator is not imminent, an official at the CMVM said in an e-mailed statement Nov. 16.

Separately, Portugal’s Socialist Party, the biggest opposition group in parliament, said it asked the country’s lenders to change their strategy of “austerity at any cost” for the southern European country.

Socialist leader Antonio Jose Seguro reaffirmed that his party would oppose a government plan to cut spending by about 4 billion euros ($5.1 billion) in the two years through 2014 as it would result in the reduction of basic services in areas such as health and education.

JPMorgan Faces Order on Anti-Money Laundering, WSJ Says

JPMorgan Chase & Co. is expected to receive an order from regulators to bolster anti-money laundering systems and examine past transactions, the Wall Street Journal reported, citing people familiar with the matter.

The Office of the Comptroller of the Currency will give the cease-and-desist order amid a wider crackdown on the nation’s largest banks, the people said, according to the newspaper. JPMorgan spokeswoman Kate Haywood in London declined to comment, as did a spokeswoman in Hong Kong.

Authorities and lawmakers in the U.S. have been increasing scrutiny of banks’ money-laundering controls.

Lafarge Says EU Visited Cement Associations in Antitrust Probe

Lafarge SA, the maker and supplier of buildings materials, said European Union antitrust officials visited French, German and European cement associations during the third quarter as part of a probe announced in 2010, according to the company’s quarterly report.

The company said the EU antitrust probe into the industry is ongoing.

Lafarge operations in France, U.K., Germany, Spain, Czech Republic, Greece and Austria are being probed.

The EU announced the investigation into cement manufacturers in December 2010.


German Citizens’ Group Sues to Block ECB’s Bond-Buying Plan

The European Central Bank was sued over its proposal to buy unlimited bonds from debt-laden countries to regain control of interest rates in nations that make up the monetary union.

A group, which currently includes 5,217 plaintiffs and is led by activist group Zivile Koalition e.V., filed the lawsuit on Nov. 12 with the European Union General Court, the 27-nation EU’s second-highest tribunal. The Luxembourg-based court’s press office confirmed the lawsuit, which seeks to block the ECB’s Outright Monetary Transactions program announced on Sept. 6.

Beatrix von Storch, the group’s spokeswoman, said in an e-mailed statement Nov. 16 that the ECB policy violates its own statues “and has an immediate influence on monetary stability in the euro area.”

The case is the sixth to reach the EU’s two top courts challenging the Frankfurt-based ECB on euro-area-related decisions.

The case is: T-492/12, Von Storch and others v. ECB.


Fed’s Dudley Says ‘Premature’ to Break Up Too-Big Banks

Federal Reserve Bank of New York President William Dudley spoke about U.S. regulators’ strategy to curb the risk from too-big-to-fail financial institutions.

More than four years after the collapse of Lehman Brothers Holdings Inc., U.S. regulators are still grappling with how to reduce the risk taxpayers will need to bail out too-big-to-fail financial firms in a crisis. Dudley spoke in New York.

For the audio, click here.

Comings and Goings

NYSE Hires Chertoff After SEC Report Cites Online Security Lapse

NYSE Euronext hired Michael Chertoff, the former U.S. Secretary of Homeland Security, after a report by Securities and Exchange Commission examiners found staffers may have violated rules for safeguarding computers at a division that oversees exchanges.

Chertoff, who served as homeland chief under President George W. Bush and is now a lawyer at Covington & Burling LLP, has been retained by the New York Stock Exchange owner, according to spokesman Robert Rendine. The appointment followed a report prepared Aug. 30 by SEC interim Inspector General Jon T. Rymer that found some employees in the agency’s division of trading and markets failed to properly secure computers that may have contained classified exchange data. Rymer’s report found no evidence the devices were breached by hackers.

Online attacks at exchanges could allow perpetrators to provide false information that might move the price of securities. The SEC lab under investigation was responsible for, among other things, assessing the vulnerability of computer systems at stock exchanges.

John Nester, a spokesman for the SEC, said the people who oversaw the equipment referenced in the report have left the agency.

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U.S. Senate Confirms Martin Gruenberg as Chairman of FDIC

The U.S. Senate granted long-delayed confirmation of Martin Gruenberg as chairman of the Federal Deposit Insurance Corp. and Thomas Hoenig as vice chairman in a unanimous consent motion last week.

Gruenberg has been acting chairman of the five-member board since last year’s departure of previous agency chief Sheila Bair. The full confirmations for the leadership positions of Gruenberg and Hoenig were held up earlier this year during partisan wrangling before the presidential elections.

In March, the Senate confirmed Hoenig to the board and renewed Gruenberg’s position for another term without confirming them in the leadership roles they’d been nominated to by President Barack Obama.

Gruenberg joined the FDIC after serving in staff positions on the Senate Banking Committee.

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