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Mt. Gox Freeze, Agency Budgets, Gold-Fix Suit: Compliance

March 6 (Bloomberg) -- Mt. Gox, the bankrupt Bitcoin exchange, should have its U.S. assets immediately frozen, Illinois resident Gregory Greene, who sued on behalf of holders of the digital currency, said in a court filing.

Freezing the assets is necessary to give “any hope of recourse” to victims of the exchange, Greene said in a motion for a court order.

Mt. Gox, which started as a marketplace for illustrated trading cards used to play the game “Magic: The Gathering,” is under investigation by prosecutors and regulators examining the use of the digital currency.

The exchange said Feb. 24 it had lost 750,000 Bitcoins belonging to users and 100,000 more of its own. It filed for bankruptcy Feb. 28 in Tokyo and said its debt exceeded its assets by 2.7 billion yen ($26.4 million).

The case is Greene v. Mt. Gox Inc., 14-cv-01437, U.S. District Court, Northern District of Illinois (Chicago).

Compliance Policy

CBOE Tightens Trader Rules After Paying $6 Million SEC Fine

Nine months after regulators fined the Chicago Board Options Exchange for failing to police its members, the biggest U.S. options market approved a rule aimed at preventing fraud.

Firms trading at the unit of CBOE Holdings Inc. will be required to write down how they supervise their businesses, according to a Securities and Exchange Commission filing from the Chicago-based options exchange. They must also carry out regular office inspections and send CBOE an annual report on regulatory practices.

CBOE was fined $6 million in June by the SEC after regulators said the exchange’s staff interfered with their investigation of illegal short selling at a member firm. When penalizing CBOE last year, the SEC said the exchange had an “ineffective surveillance program that failed to detect wrongdoing despite numerous red flags.”

Gail Osten, a CBOE spokeswoman, said the rule change formalized practices that were already in place “but not in writing” in order to make “supervision and control more effective.”

Judith Burns of the SEC declined to comment.

CFTC, SEC Budgets Increases Sought for Dodd-Frank Enforcement

The Commodity Futures Trading Commission, under the budget introduced this week, would receive $280 million, a 30 percent increase from current levels, though 10 percent below President Barack Obama’s request from a year ago.

The agency has warned it lacks resources to fully oversee derivatives trading.

The Securities and Exchange Commission would be funded at $1.7 billion, an increase of 26 percent, to support enforcement, examination and other programs.

EU Parliament Lawmakers Publish Bank Crisis Law Compromises

European Parliament lawmakers submitted compromise proposals on a bank crisis law in a bid to advance talks with national governments, the assembly said in an e-mailed statement.

The texts are intended to be used as a “last attempt” to negotiate a planned single resolution mechanism for euro-area banks, said Elisa Ferreira, the assembly member in charge of the draft law.

Legislators, who remain far apart on the issue, plan to vote on the draft law in April whether or not there is a deal, according to a statement co-signed by other lawmakers involved in the talks.

Courts

Barclays, Deutsche Bank Accused of Gold Fix Manipulation

Barclays Plc, Deutsche Bank AG and three other banks were accused in a lawsuit of manipulating the London gold fix.

Kevin Maher, a New York resident who said he bought and sold gold, gold futures and options, sued March 4 in Manhattan federal court claiming the five banks overseeing the century-old benchmark colluded to manipulate it. He is seeking to represent a class of investors who held or traded gold and gold derivatives.

Authorities around the world, already investigating the manipulation of benchmarks from interest rates to foreign exchange, are examining the gold market for signs of wrongdoing.

“We believe this suit is without merit and will vigorously defend against it,” Renee Calabro, a spokeswoman for Frankfurt-based Deutsche Bank, said in an e-mail.

Spokesmen for Barclays and HSBC Holdings Plc declined to comment on the lawsuit. Spokesmen for Societe Generale SA and Bank of Nova Scotia didn’t respond to messages seeking comment.

The case is Maher v. Bank of Nova Scotia, 14-cv-01459, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporter on this story: Carla Main in New York at cmain2@bloomberg.net

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net

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