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Chiquita-SEC, Shell Records, Payday Lenders: Compliance

Nov. 21 (Bloomberg) -- Chiquita Brands International Inc.’s bid to stop the U.S. Securities and Exchange Commission from releasing documents on payments to a Colombian terrorist group was dismissed by a federal judge.

U.S. District Judge Richard Leon in Washington rejected the company’s argument that the damage it would suffer from disclosure of the records should bar their release to a public interest group under the Freedom of Information Act.

“Chiquita’s speculation about potential publicity and its effect on a future jury in the Florida litigation does not satisfy the level of certainty required” to exempt the records from the law’s requirements, Leon said in a decision yesterday.

Chiquita, based in Charlotte, North Carolina, contended release of the records could compromise the fairness of trials in Florida, where families who claim relatives were kidnapped and murdered after the company made payments to the United Self Defense Forces of Colombia have filed lawsuits.

Chiquita plans to appeal Leon’s ruling, Ed Loyd, a company spokesman, said in an e-mailed statement.

The group seeking the release of the documents, the National Security Archive, “is not an independent public interest group,” Loyd said. “It is associated with and is actively assisting the plaintiffs’ lawyers who are involved in trying to extract millions of dollars from Chiquita through litigation.

‘‘Chiquita does not believe that the Archive is entitled to the documents under FOIA and the company will continue to defend against these claims.’’

The SEC is ‘‘pleased with the decision,’’ John Nester, a commission spokesman, said in an e-mailed statement.

The case is Chiquita Brands International Inc. v. U.S. Securities and Exchange Commission, 13-cv-00435, U.S. District Court, District of Columbia (Washington).

Cash America to Pay $19 Million Over CFPB Debt-Collection Claims

Cash America International Inc., the Texas-based payday lender and pawn shop operator, will pay $19 million to settle U.S. Consumer Financial Protection Bureau complaints over its debt-collection practices.

The settlement announced by the consumer bureau in a statement yesterday ends a probe, which the company disclosed in an Oct. 28 regulatory filing, that stemmed from alleged robo-signing of documents used in lawsuits filed by Cash America in Ohio. The bureau also accused the company of overcharging members of the military and their families for short-term loans.

DOJ and SEC Have Substantial Pipeline of FCPA Investigations

The government has a substantial pipeline of Foreign Corrupt Practices Act investigations, including some potentially major criminal actions involving significant penalties that might be announced before year’s end, a senior Department of Justice official said Nov. 19.

Charles Duross, deputy chief of the FCPA unit of the DOJ Criminal Division’s Fraud Section, observed that 2013 ranks fifth in terms of the biggest overall FCPA penalties imposed annually. That ranking ‘‘will move up before the end of the year,” he predicted.

Duross added that DOJ has more than 150 active FCPA investigations. The Securities and Exchange Commission has about 100 ongoing FCPA investigations, said Kara Brockmeyer, chief of the SEC Enforcement Division’s FCPA unit. Although the commission’s FCPA enforcement numbers are down in 2013 compared with prior years, more cases will be announced in the near future, she said. Some of those cases are on a parallel track with the DOJ cases, Brockmeyer said by e-mail yesterday.

Duross and Brockmeyer spoke at the American Conference Institute’s International FCPA Conference in Washington on Nov. 19.

For more, click here.

Vitol, Shell Ask Judge to Halt Release of CFTC Oil Probe Records

Some of the world’s largest oil traders including Vitol Group, Morgan Stanley and Royal Dutch Shell Plc are asking a judge to stop the disclosure of millions of records gathered by the top U.S. commodity regulator during its nationwide investigation of the crude markets.

The haul includes e-mails, depositions, trading records and audio files obtained by the U.S. Commodity Futures Trading Commission since its probe of the oil market began in December 2007. The companies are appealing an Oct. 25 order by U.S. District Judge William H. Pauley that would allow the handover of the trove to lawyers leading a civil case alleging market manipulation by firms controlled by Norwegian billionaire John Fredriksen.

The battle over the records reveals for the first time the breadth of the CFTC’s investigation. The agency told Pauley in August that 5.7 million documents and almost 200,000 audio files had been sent to the defendants in the manipulation case. Many of the files came from the national probe.

“Society needs more inspection of trading in the crude oil markets, not less,” said Chris Lovell, an attorney with Lovell Stewart Halebian Jacobson LLP in New York, who is leading the case and seeking class-action status on behalf of traders who claim to have lost money because of alleged manipulation.

Pauley’s Oct. 25 order sharply restricts access to materials from the CFTC cache that the companies claim are “highly confidential.” Circulation of the documents will be limited, and Lovell and other attorneys involved in the civil case will have to sign declarations promising to comply with the confidentiality provisions. Use of the files for any other business purpose, such as trading strategies or unrelated lawsuits, is forbidden.

The case stems from the CFTC’s 2011 claims against Nick Wildgoose and James Dyer, traders at Fredriksen affiliates Parnon Energy Inc. in Houston and Arcadia Petroleum Ltd. in London. They are accused of manipulating the oil market in 2008 as prices rocketed toward $147 a barrel. The defendants have denied the allegations. Some of the companies whose records were disclosed to Parnon earlier this year weren’t notified until after the files were sent, court records show.

“We believe the CFTC may have improperly disclosed certain records,” said Brad Leone, a spokesman for Plains All American Pipeline LP, one of the companies appealing Pauley’s order.

Shell, Morgan Stanley, Vitol, Plains and Castleton Commodities International LLC have appealed Pauley’s order. Spokesmen for Vitol, Shell and Morgan Stanley declined to comment; an attorney for Castleton didn’t return calls and an e-mail seeking comment.

The case is In Re: Crude Oil Commodity Futures Litigation, 11-cv-03600. The CFTC case is U.S. Commodity Futures Trading Commission v. Parnon Energy Inc., 11-cv-03543, U.S. District Court, Southern District of New York (Manhattan). The appeal is U.S. Commodity Futures Trading Commission v. Parnon Energy Inc., 13-04206, U.S. Court of Appeals for the Second Circuit (Manhattan).

For more, click here.

Germany Seeks to Probe E-Plus Deal in Tug of War With EU Agency

Germany’s antitrust regulator sought the right to probe Telefonica SA’s purchase of Royal KPN NV’s E-Plus unit, setting up a possible tug of war with the European Union over who reviews the deal.

The Federal Cartel Office yesterday lodged the request at the Brussels-based European Commission with the backing of the government, Andreas Mundt, the authority’s president, said in an e-mailed statement. The EU’s merger review agency now has 35 working days to rule on the bid, he said.

“The merger has effects exclusively on the German mobile-phone market,” said Mundt. “So a referral would be the right way.”

The 8.55 billion-euro ($11.6 billion) sale, which will merge the two companies’ German units, is one of two deals that may transform the country’s telecommunications industry once dominated by Deutsche Telekom AG. EU regulators have already given the go ahead to Vodafone Group Plc’s bid for Kabel Deutschland Holding AG.

EU Competition Commissioner Joaquin Almunia said on Sept. 13 the deal should be handled by his unit, not by the Germans. The Bonn-based Cartel Office is concerned that the transaction would reduce the number of mobile-phone providers in the country to three from four.

Antoine Colombani, Almunia’s spokesman, didn’t immediately return a call seeking comment.

Goldman Seeks to Halt Singapore Tycoon Lawsuit Over Yen-Real Bet

A Goldman Sachs Group Inc. unit asked a court to halt Singapore tycoon Oei Hong Leong’s lawsuit claiming it misled him into making leveraged trades that the yen would fall against the Brazilian real.

Goldman Sachs International said in a Nov. 6 filing with the Singapore High Court that proceedings should be suspended in favor of private and confidential arbitration. Court papers detailing reasons aren’t publicly accessible. A closed hearing is scheduled for Nov. 22.

Oei, who in 2009 settled a claim against Citigroup Inc. over S$1 billion ($804 million) in trading losses, accused Goldman Sachs in the lawsuit of making fraudulent representations that the real was a stable and liquid currency anchored to the U.S. dollar. He’s seeking $31.7 million in trading losses, plus interest.

Goldman Sachs will defend Oei’s lawsuit, which is without merit, Hong Kong-based spokesman Edward Naylor said when asked for comment on the case.

Oei will challenge Goldman Sachs’s arbitration bid, his lawyer, Siraj Omar, said.

“Mr. Oei’s position is that the Singapore court is the proper place to decide the claim, especially since the misrepresentation that he is complaining about occurred in Singapore,” Omar said. “He sees no basis for moving this to confidential arbitration in London.”

Oei, a Goldman Sachs client since 2001, describes himself as an experienced investor and a “prominent and highly respected member of the Singapore business community,” according to his court papers.

“This is not a claim that is being brought because I am unhappy at the outcome of my investment decision,” Oei said in court papers. “As a result of this fraud, I have suffered significant losses.”

The case is Leong v. Goldman Sachs International, S834/2013, Singapore High Court.


SAC Manager Made ‘Big Money’ on Insider’s Tips, Prosecutor Says

SAC Capital Advisors LP fund manager Michael Steinberg reaped “big money” on illicit tips on Dell Inc. and Nvidia Corp. funneled to him by his analyst, Jon Horvath, a prosecutor told a Manhattan federal jury.

After some of the information that Horvath provided resulted in unprofitable trades, Steinberg summoned the analyst to his desk in mid-2007 following a particularly large trading loss and gave him an ultimatum, Assistant U.S. Attorney Antonia Apps said yesterday in her opening statement.

“Michael Steinberg told Jon Horvath he needed to get ‘edgy proprietary information’ -- the kind of information he could make money on, the kind of information that would give him the illegal edge he needed,” Apps said.

Steinberg, one of eight SAC employees to be charged with insider trading by the U.S., is the first to go to trial. The hedge fund owned by billionaire Steven A. Cohen agreed about two weeks ago to plead guilty as part of a record $1.8 billion settlement with the government over charges it fostered a culture of rampant insider trading.

Apps said that Horvath, who pleaded guilty and agreed to testify against Steinberg, was part of a chain of friends who obtained revenue data about technology companies ahead of earnings announcements and swapped the information with each other and provided it to their friends and to the portfolio managers they worked for.

Steinberg’s defense lawyer, Barry Berke, told jurors in his opening that in September 2012, Horvath was set to go to trial for insider trading in the same stocks and decided instead to implicate his former boss for crimes the analyst committed and avoid going to prison.

“You will see that the reason that we are here is because the government’s star witness, Jon Horvath, was trapped,” Berke said.

Berke said at least three members of Horvath’s circle of tipsters had pleaded guilty and were set to testify against him when he decided to cooperate with the government and implicate Steinberg.

“He wanted to avoid jail but he was too late, his circle of friends had pleaded out,” Berke said. “He needed to point the finger at somebody else to get a deal. He traded his freedom for that of another. He chose his self-interest over the truth and claimed Michael Steinberg was involved in his misdeeds.”

Steinberg, 41, who has pleaded not guilty, is the longest-serving SAC employee of those the U.S. has charged in its insider-trading probe.

The case is U.S. v. Steinberg, 12-cr-00121, U.S. District Court, Southern District of New York (Manhattan).

For more, click here.

Madoff Ex-Controller Says She Begged U.S. for Mercy While Lying

Bernard L. Madoff’s former controller, who helped him siphon customer money for years to hide trading losses, told a jury she was in a state of denial when she begged prosecutors not to charge her two years ago.

Enrica Cotellessa-Pitz, who in 2011 pleaded guilty to aiding Madoff’s $17 billion fraud, initially lied to the U.S. Attorney’s Office in a letter seeking mercy and proclaiming she’d done nothing wrong, she testified yesterday in the trial of five former colleagues in Manhattan federal court.

“I was basically in denial,” Cotellessa-Pitz, who faces as long as 50 years in prison, told a jury. “I was emotionally in a place that I can’t really comprehend at this time. It was a very dark period for me.”

Cotellessa-Pitz is one of about half a dozen former Madoff employees who pleaded guilty in the case and plan to testify against those who haven’t. It’s the first criminal trial stemming from the scheme, which prosecutors say started in the early 1970s and imploded at the peak of the financial crisis.

Cotellessa-Pitz, who joined Madoff’s firm in 1978 and became controller a decade before it collapsed, pleaded guilty in December 2011 to falsifying regulatory records and committing broker-dealer fraud, though she said she wasn’t aware of the underlying Ponzi scheme.

Before she signed a cooperation agreement, which doesn’t guarantee a reduction in her sentence, Cotellessa-Pitz wrote prosecutors urging them not to charge her. She had heard from her lawyer that charges were imminent, she said.

The case is U.S. v. O’Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).

For more, click here.

To contact the reporter on this story: Ellen Rosen in New York at

To contact the editor responsible for this story: Michael Hytha at

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