Fund managers will face tougher European Union pay rules as part of a package of financial-services regulations approved by lawmakers yesterday.
The European Parliament backed measures limiting guaranteed bonuses for managers of funds known as Undertakings for Collective Investment in Transferable Securities, or UCITS, and requiring payment of at least 40 percent of variable pay to be deferred for a minimum of three years. The move is part of votes on topics ranging from high-frequency trading to bank account fees, as lawmakers clear the decks before adjourning for May elections.
The fund manager pay rules are a key part of a draft law targeted at boosting regulation of the UCITS industry and preventing fraud similar to that orchestrated by Bernard Madoff, who pleaded guilty in 2009 to orchestrating what prosecutors called the biggest Ponzi scheme in history. The fallout included the liquidation of four UCITS funds, a type of retail investment vehicle allowed to operate across the EU.
Under the draft law, banks and other institutions that act as depositories for UCITS would face limits on their ability to delegate responsibility for the safekeeping of assets.
The draft law also includes a requirement for half of bonuses for UCITS managers to be paid in the fund’s own shares, or similar securities. Guaranteed bonuses would be banned, with an exception for first-year staff.
The European Securities and Markets Authority will draft pay guidelines covering staff at UCITS management companies.
Separately, the parliament approved a bill yesterday that may force senior unsecured creditors in European Union banks to take losses before public money can be injected to prop up a lender. Lawmakers have vowed to prevent a recurrence of the bailouts that followed the collapse of Lehman Brothers Holdings Inc.
The bill requires 8 percent of a failing bank’s liabilities to be wiped out before recourse can be made to industry-financed resolution funds and other backstops. The rules must be passed by the EU’s 28 national governments.
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Credit Suisse Said to Get New York Subpoena in Tax-Evasion Probe
New York’s top banking regulator sent a subpoena to Credit Suisse Group AG last week as he examines whether its private bank helped clients evade state taxes, a person with knowledge of the matter said.
Benjamin Lawsky, the superintendent of New York’s Department of Financial Services, sought records from the firm’s New York operations, including e-mails, travel records, calendars, payroll information and material on hard drives. He also is seeking information on Roger Schaerer, a former top manager at the New York office, and on executives who worked with Schaerer, the person said, asking not to be identified because the probe is confidential.
Lawsky opened the inquiry last month, asking the bank for documents, as well as materials gathered by the U.S. Senate’s Permanent Subcommittee on Investigations, which also has examined the bank. Credit Suisse has been looking to resolve an earlier federal investigation of its alleged role in helping Americans evade taxes, a probe that already prompted the Zurich-based bank to book more than $1 billion in legal provisions and fines.
Lawsky has the power to revoke Credit Suisse’s license to operate in New York, a threat he employed two years ago against Standard Chartered Plc as part of his investigation into whether the London-based bank violated U.S. laws regarding money transfers linked to Iran. While he doesn’t have the authority to criminally charge the bank, he can refer findings to the state’s attorney general.
“Credit Suisse is cooperating fully” with Lawsky’s office, said Jack Grone, a company spokesman. Jodi Avergun, a lawyer for Schaerer, didn’t respond to a message seeking comment. The subpoena was reported yesterday by the Financial Times.
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MAS Says Mermaid Maritime Penalized for Contravening SFA
Mermaid Maritime Pcl was late in disseminating information to the market on changes in interest in its securities, according to a statement on the website of the Monetary Authority of Singapore.
The company provides drilling and sub-sea engineering services for the offshore oil and gas industry, with clients in South East Asia, the North Sea, the Middle East and South America.
HFT Rules Needed to Regain Confidence, McCaughan Says
James McCaughan, chief executive officer of Principal Global Investors, talked about high-frequency trading.
He spoke with Tom Keene, Adam Johnson and Peter Orszag on Bloomberg Television’s “Surveillance.”
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Comings and Goings/Executive Pay
Barclays Picks Crawford Gillies as a Director to Oversee Pay
Barclays Plc moved to appease investor anger over pay by replacing John Sunderland as director responsible for employee compensation.
Crawford Gillies, a director of Standard Life Plc, will join the bank’s compensation committee on May 1 and become chairman to oversee pay at a date to be agreed on, London-based Barclays said in a statement yesterday.
Chief Executive Officer Antony Jenkins is set to face investors at a meeting on April 24. The bank is seeking shareholder backing to award bonuses twice as much as basic pay, as it’s required to do under European Union rules that start this year. The U.K.’s Local Authority Pension Fund Forum called on shareholders last month to oppose Barclays’s pay plans, citing the “awful performance” of its investment bank.