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EU-U.S. Data, European ABSs, SEC-CFTC Merger: Compliance

April 14 (Bloomberg) -- European Union data-protection regulators say EU citizens should be able to sue U.S. companies that abuse their personal data before EU courts.

The so-called Article 29-working party of the EU’s 28 data-protection authorities is seeking changes to the EU-U.S. safe harbor deal, which governs the transfer of data by U.S. companies out of the EU.

EU data subjects should have the “same data protection rights” as “U.S. ones, especially in case of surveillance through U.S. national authorities,” the regulators commented in a letter to the European Commission posted on the EU website.

EU citizens should also be able to take claims to national data-protection authorities, according to the letter.

Compliance Policy

ECB Unites With BOE in Call for Easier ABS Rules to Boost Credit

The European Central Bank and the Bank of England in a joint paper published April 11 said regulators must support and promote the asset-backed bond market and be mindful that rules to promote the safety of the financial system don’t impair the securities.

The central banks said while a “prudently designed” ABS market has the potential to improve efficiency in resource allocation and risk sharing, rules to address shortcomings in the securities revealed by the financial crisis may be “unduly conservative.” ECB and BOE officials were gathered in Washington for an International Monetary Fund meeting, with Group of 20 nation leaders.

“The ‘high-quality’ segment of the securitization market should aim to be more resistant to market stress, thereby providing banks with a resilient form of funding,” the ECB and the BOE said in the statement.

SEC-CFTC Merger, Examiner Degrees Pushed by Bipartisan Center

The creation of a single “Capital Markets Authority” to oversee markets is among the recommendations made in a Bipartisan Policy Center report on the need to make the U.S. financial regulatory system more efficient.

The authority would be created through a merger of the Securities and Exchange Commission and the Commodity Futures Trading Commission. The Center recommended a transition to a consolidated examination force through a merger of the banking agencies into a unified supervisory agency.

Other suggestions included establishing undergraduate, graduate and master’s degree programs for bank examiners in a bid to “raise the profile and skill level” of examiners as a profession.

Compliance Action

U.S. Agencies Urge Banks to Fix Heartbleed Web-Security Flaw

Banks and other financial institutions should take steps to patch their computer systems as soon as possible to prevent attacks that exploit the Heartbleed Internet-security flaw, U.S. agencies said.

The Federal Financial Institutions Examination Council, made up of representatives from the Federal Reserve Board of Governors, the Consumer Financial Protection Bureau and other regulators, said systems that operate a widely used encryption technology called OpenSSL are at risk of being hacked.

Heartbleed, which was recently discovered by researchers at Google Inc., prompted security experts to urge consumers to change their Web passwords, even as Google, Facebook Inc. and large banks said they weren’t affected.

Mary Jo White Defies Political Meddling in First Year at SEC

Mary Jo White took over the Securities and Exchange Commission with a back-to-basics plan to toughen enforcement and clear a backlog of regulations aimed at the last financial crisis.

Now White and the SEC may be confronting the next crisis: claims that the stock market is rigged. Ending her first year as SEC chairman, White faces a surge of pressure to rein in high-frequency traders portrayed as the stock market’s scalpers in Michael Lewis’s new book, “Flash Boys.”

A former litigator renowned for her independent streak, White said the agency won’t be knocked off its course. The regulator is taking a long view, examining all features of the hyper-fast markets, including high-frequency traders, and using a “data-driven, disciplined approach.”

“Certainly if we arrived at that conclusion as to any aspect of that, we would take action and respond,” White said. “But you want to be right about it and smart about it.”

Wall Street banks and brokers have taken note of White’s decision to seek more admissions of wrongdoing and her vow to push for settlements that “have teeth.” At the same time, she’s eased some worries by preaching the need to review regulatory burdens and weigh the cost of new rules.

For more, click here.

Courts

RBS Misused Insurer’s Confidential Report, U.K. Judge Rules

Primary Group won a lawsuit against Royal Bank of Scotland Group Plc after the lender showed a report that contained confidential financial information to Direct Line, an RBS subsidiary that competed with the insurance group.

The breach wasn’t used to help Direct Line, Judge Richard Arnold said when he awarded damages of 5,000 pounds ($8,367). RBS asked KPMG to prepare a report on Primary after it breached covenants on 26 million pounds of debt.

Primary’s claim against Direct Line was dismissed.

An RBS spokeswoman declined to immediately comment on the ruling.

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

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

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