Twitter-Facebook, Libor Bribe Charges, Milan: Compliance

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Facebook and Twitter users who threaten violence online will face criminal charges in Britain, while people posting “grossly offensive” comments may avoid punishment by hitting the delete button, prosecutors said.

Threats, harassment and stalking on sites run by Twitter Inc. and Facebook Inc. will be prosecuted “robustly” under new social-media guidelines, while non-threatening messages that are obscene or false may trigger charges if they “cross a high threshold,” the Crown Prosecution Service said yesterday.

Keir Starmer, the agency’s director of public prosecutions, said in an e-mailed statement that the rules are intended to “strike the right balance” between freedom of expression and the need to uphold the criminal law.

While the guidelines don’t change any U.K. laws, they are intended to assist police in deciding how to handle complaints about online communications and help prosecutors determine whether charges should be filed in specific cases. Facebook and Twitter were both involved in discussions on the rules and the public can comment until March 13, the CPS said.

“The interim guidelines set out some very sensible tests for when prosecutions would be appropriate,” Richard Allan, the policy director for Europe, the Middle East and Africa for Menlo Park, California-based Facebook, said in a statement.

Rachel Bremer, a spokeswoman for San Francisco-based Twitter, declined to comment on the CPS proposals.

Compliance Action

UBS Libor Traders Face Criminal Charges for ‘Getting Rich’

UBS AG’s $1.5 billion fine for rigging global interest rates expands the scandal to include bribery of brokers and U.S. criminal charges against two former traders.

Tom Alexander William Hayes and Roger Darin were charged with conspiracy in a criminal complaint unsealed yesterday, the U.S. Justice Department said. Hayes also was charged with wire fraud and a price-fixing violation for activity with another bank aimed at manipulating the London Interbank Offered Rate, the department said.

Hayes, one of two former UBS AG traders charged by U.S. prosecutors, is portrayed by American regulators as the kingpin of a three-year campaign that succeeded in manipulating global interest rates.

The charges are the first brought by the Justice Department against individuals alleged to have manipulated Libor and comparable benchmarks in Europe and Japan.

The U.S. Commodity Futures Trading Commission’s $700 million fine is the largest in the Washington-based agency’s history, David Meister, the commission’s head of enforcement, said at the news conference. The total penalties of $1.5 billion represent about one-third of the bank’s 2011 net income.

The U.S. government said the two men were part of a conspiracy to commit wire fraud from September 2006 to 2009. Hayes, 33, served as a senior yen swaps trader at UBS in Tokyo, while Darin, 41, worked as a short-term interest rates trader at UBS in Singapore, Tokyo and Zurich, the U.S. said.

Prosecutors allege that Hayes and Darin “conspired with others known and unknown within UBS to cause the bank to make false and misleading yen Libor submissions to the British Bankers’ Association.”

Darin didn’t respond immediately to a voice-mail message, and Hayes couldn’t immediately be reached. U.K. fraud prosecutors opened a criminal probe this year and last week arrested Hayes, according to people familiar with the matter.

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Separately, the influence of a UBS trader in Tokyo who colluded with other banks to align their submissions on the Libor have come to light.

The employee led efforts to influence Japanese Yen Libor submissions by paying brokers as much as 15,000 pounds ($24,400) a quarter and offering a payment to another for helping him keep that day’s rate low. The banker, only identified by regulators as Trader A, worked at UBS in Tokyo from 2006 to 2009 and directly contacted employees at other banks to influence their submissions at least 80 times.

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Separately, UBS is under scrutiny in Hong Kong for possible misconduct linked to the benchmark rate set in the city.

The Hong Kong Monetary Authority has started an investigation to see if there was wrongdoing by the Swiss bank in its submission of data for setting the Hong Kong Interbank Offered Rate, according to a statement from the de-facto central bank today. The HKMA is also reviewing whether the potential misconduct may have had a material impact on the rate.

Overseas regulators alerted the HKMA about potential manipulation of the local interbank lending rates and other reference rates in the region, it said. The move signals that the world’s biggest banks, some of which have already been penalized in Japan, may now be probed in more Asian nations even as they seek to placate U.S. and U.K. authorities.

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For a related video, see Interviews, below.

Thomson Reuters Offer Accepted by EU to End Antitrust Probe

Thomson Reuters Corp.’s offer to create a new license for securities identification codes was accepted by European Union regulators to settle an antitrust probe.

The company’s proposal means that so-called Reuters Instrument Codes will work better with rival services, according to an e-mailed statement today from the European Commission, the Brussels-based antitrust authority. Customers will also have greater possibility “to switch to competing providers of consolidated real-time data-feeds,” it said.

Regulators opened an investigation into the Thomson Reuters codes in 2009, saying customers may potentially be locked in to working with the company because replacing the codes required a long and costly procedure to rewrite or reconfigure software applications. The agency last year settled a similar probe into Standard & Poor’s licensing fees for securities identification numbers.

“Today’s announcement brings this matter to a close with no finding of liability,” Thomson Reuters said in an e-mailed statement. The company’s pledge to regulators will allow customers to continue to use codes “with data from an alternative consolidated data feed provider,” it said.

Bloomberg LP, the parent of Bloomberg News, competes with Thomson Reuters in selling financial and legal information and trading systems.


SAC Case Deadline May Force U.S. to Tip Hand on Any Cohen Deal

Prosecutors face a deadline next week that may force them to tip their hand on whether they’re in plea talks with an ex- SAC Capital Advisors LP manager to get him to testify against founder Steven Cohen about insider trading.

Federal speedy-trial rules require Manhattan prosecutors to secure a grand jury indictment by Dec. 26 against portfolio manager Mathew Martoma, who was charged in a complaint Nov. 20 with making illegal trades on two drug company stocks after receiving confidential tips.

Martoma, 38, may agree to postpone the U.S. deadline. If he does, prosecutors requesting the adjournment sometimes tell the presiding judge whether the two sides are in plea talks, or at least provide some hint of negotiations.

In what U.S. prosecutors call the “most lucrative” insider scheme ever, Martoma was accused of trading on shares of Elan Corp. and Wyeth LLC based on tips he got from Sidney Gilman, a University of Michigan neurologist.

The complaint doesn’t name Cohen, referring only to a “Hedge Fund Owner” with whom Martoma spoke. A person familiar with the case identified the fund owner as Cohen last month.

Martoma, who lives in Boca Raton, Florida, and was fired from SAC in 2010, hasn’t responded to the charges, though his lawyer has said he will be exonerated. Gilman entered a cooperation deal in which the U.S. agreed not to prosecute him.

Jonathan Gasthalter, a spokesman for Stamford, Connecticut-based SAC, declined to comment on the deadline. He has said Cohen and SAC acted appropriately in making the trades.

Defense attorney Charles Stillman, who said at Martoma’s court hearing last month that he’d likely seek an adjournment, didn’t return calls for comment. Jerika Richardson, a spokeswoman for U.S. Attorney Preet Bharara, declined to say if prosecutors will seek an indictment from a grand jury or ask for an extension.

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JPMorgan, Depfa Among Banks Convicted in Swaps Fraud Case

Deutsche Bank AG, JPMorgan Chase & Co., UBS AG and Depfa Bank Plc were convicted by a Milan judge for their role in overseeing fraud by their bankers in the sale of derivatives to the city of Milan.

Judge Oscar Magi in Milan ordered that about 90 million euros ($119.6 million) of assets be seized from the banks, the amount of their profit, and that the firms pay sanctions of 1 million euros each. He also convicted nine bankers of fraud, and suspended their sentences.

Yesterday’s convictions come as global authorities investigate claims that more than a dozen banks altered submissions used to set benchmarks such as Euribor and Libor to profit from bets on interest-rate derivatives, such as the ones used by Milan.

In separate statements, the banks said they disagree with the verdict and plan to appeal. They had been on trial since May 2010, accused of defrauding Milan by hiding how much they made on the derivatives. The companies had denied the charges and settled with the city government in March, agreeing to unwind interest-rate swaps, which adjusted payments on 1.7 billion euros of bonds sold by the city in 2005.

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Amgen Plea Deal in Aranesp Misbranding Accepted by Judge

A federal judge accepted Amgen Inc.’s plea agreement to a charge it misbranded its anemia drug Aranesp after declining to approve the deal at a hearing on Dec. 18, saying he hadn’t been given enough time to consider its ramifications.

U.S. District Judge Sterling Johnson in Brooklyn, New York, signed off yesterday on the agreement with prosecutors, which will cost the company $150 million in criminal penalties. Amgen will also pay $612 million to settle civil claims over its marketing practices, prosecutors said.

Amgen was estimated to have reaped about $85 million in gains from misbranding Aranesp, Assistant U.S. Attorney Roger Burlingame said during yesterday’s hearing. The company pleaded guilty at the Dec. 18 hearing to a single misdemeanor misbranding charge over the allegations.

The case is U.S. v. Amgen Inc., 1:12-cr-00760, U.S. District Court, Eastern District of New York (Brooklyn).


CFTC’s Chilton Calls UBS Libor Fine ‘Historic’

Bart Chilton, a commissioner at the U.S. Commodity Futures Trading Commission, talked about UBS AG’s $1.5 billion settlement for rigging interbank rates.

Chilton spoke with Mark Crumpton on Bloomberg Television’s “Bottom Line.”

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Gotbaum Testifies on Health of Multiemployer Pensions

Joshua Gotbaum, director of the Pension Benefit Guaranty Corp., testified at a House Education & the Workforce Subcommittee on Health, Employment, Labor and Pensions about the challenges facing multiemployer pension plans and the potential for reform.

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Comings and Goings

Juncker Says Possible Dijsselbloem to Be Next Eurogroup Chief

Luxembourg Prime Minister Jean-Claude Juncker said he has “reasons to believe” Dutch Finance Minister Jeroen Dijsselbloem could be his successor as head of the group of 17 euro-area finance chiefs.

Juncker made the remarks in an interview with Luxembourg radio 100.7 yesterday. He said he expects to request nominations by early January and “that there will only be one candidacy.”

Juncker, who was appointed to a new 30-month term as eurogroup head in July, said earlier this month that he will step down from that role by the end of January. Juncker has led meetings of the euro-area finance ministers since 2005.

Dijsselbloem, 46, told Dutch RTL television on Dec. 18 that he would consider leading the eurogroup if asked, though he hasn’t been approached about the position. A member of the Labor Party, he was named as the Netherlands’ finance minister on Nov. 5 as part of Liberal Prime Minister Mark Rutte’s coalition government following elections in September.

Other EU leaders have indicated they wouldn’t oppose Dijsselbloem.

BaFin Appoints Hufeld as Head of German Insurance Supervision

Felix Hufeld will start Jan. 2 as the head of German Insurance Supervision, financial markets regulator BaFin said in an e-mailed statement yesterday.

Hufeld follows Gabriele Hahn, now head of Bafin’s Human Resources and Regulatory Service unit. Hufeld’s former positions included head of German, Austrian and northern European business at insurance broker Marsh & McLennan Cos.

Notable Passing

Robert Bork, Judge Defeated in Supreme Court War, Dies at 85

Robert Bork, the U.S. judge and legal scholar whose nomination to the Supreme Court by President Ronald Reagan set off a battle for the judiciary that lived on long after the U.S. Senate rejected him, has died. He was 85.

He died this morning at Virginia Medical Center in Arlington, Virginia, said his son, Robert Jr. The cause was heart disease.

Bork’s defeat in the Senate by a roll call of 58 to 42 -- the most votes ever against a Supreme Court nominee -- established new rules for how prospective justices get selected and vetted. The word “borking” entered the political lexicon, meaning, according to the Oxford English Dictionary, trying to block candidates for public office “by systematically defaming or vilifying them.”

In nationally televised hearings, the Senate Judiciary Committee delved into Bork’s ideology, not just his legal qualifications or competence. His past commentary on hot-button issues became fodder for his interrogators, establishing that long paper trails can be liabilities for judicial nominees. The legacy of the Bork nomination has caused advocacy groups to adopt the tactics of political campaigns around judicial nominations.

Bork was praised yesterday in a statement by U.S. Supreme Court Justice Antonin Scalia as “one of the most influential legal scholars of the past 50 years,” citing his thinking in the areas of antitrust and constitutional law.

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