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London Gold Fixing, Pension Gold, BofA-RMBS: Compliance

Regulators are stepping up their scrutiny of how gold prices are set, with officials from Britain’s Financial Conduct Authority visiting Societe Generale SA to observe the London fixing process, two people with knowledge of the matter said.

Investigators visited the French bank’s U.K. offices in recent weeks for the morning and afternoon conference calls, during which the reference price used by miners, jewelers and central banks is set, the people said.

The watchdog is visiting all five member banks involved in the London fixing as part of its review of gold benchmarks, according to one of the people, who asked not to be identified because the matter is private.

A spokeswoman for Societe Generale declined to comment.

The FCA’s visits are the first indication the regulator is looking at the London gold fixing in particular. In November, a person with knowledge of the matter said the agency was reviewing gold benchmarks as part of a wider look at how financial rates are set in the wake of the London interbank offered rate-manipulation scandal. The watchdog hasn’t leveled any accusations that the process is being manipulated.

Compliance Policy

U.K. Gold Demand Seen Rising as Regulator Reviews Pensions

U.K. gold demand will get a boost from investors saving up for retirement if the U.K.’s Financial Conduct Authority adds bullion to its list of “standard assets,” the brokerage GoldCore Ltd. said.

The FCA’s predecessor authority published a consultation paper with the list in 2012, asking whether other types of investment should be added. Cash, bonds and exchange-traded commodities were included, and physical gold was not. The regulator’s decision is expected by the end of June, GoldCore said in a report April 25.

The FCA rules apply to U.K. providers of self-invested personal pensions. Investment-grade gold was permitted for them since 2006 and featuring it on the regulator’s list would help raise awareness that pension funds can invest in physical bullion, according to GoldCore.

Aso Says Japan Has No Immediate Plan to Ease Consumer-Loan Rules

Japan’s government has no immediate plans to relax consumer-finance regulations, Financial Services Minister Taro Aso said, days after a lawmaker said the ruling party will consider such a move.

A 2006 legislative change designed to protect consumers “was pretty effective to deal with heavily indebted people,” Aso said in response to a question from the upper house audit committee in Tokyo today. “At this point in time, the government has no intention to change the regulations.”

The Liberal Democratic Party will form a panel next month to examine whether to loosen restrictions on consumer lenders to give borrowers more options to obtain credit, LDP member Masaaki Taira said in an April 24 interview. Japan should consider scrapping part of the law that limits credit to a third of a borrower’s income, and raising a cap on interest, he said.

The panel may submit a proposal to the Diet in the current parliament session, Taira said. Previous efforts to relax the laws stalled because the LDP wasn’t in power, he said.

Compliance Action

BofA Said to Face More Than $13 Billion Demand in U.S. RMBS Case

U.S. prosecutors are seeking more than $13 billion from Bank of America Corp. to resolve federal and state investigations of the lender’s sale of bonds backed by home loans, or residential mortgage backed securities, in the run-up to the 2008 financial crisis, according to people familiar with the matter.

The settlement would come on top of the $9.5 billion the bank agreed last month to pay to resolve Federal Housing Finance Agency claims, said two people who asked not to be named because the negotiations are private. A deal could come within the next two months, the people said.

Bank of America hasn’t specified how much money it has set aside for the RMBS case. Spokesmen for Bank of America and the Justice Department declined to comment on the negotiations.

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United Technologies Says SEC Probing Jet-Engine Sales to China

United Technologies Corp. said the U.S. Securities and Exchange Commission is investigating a non-employee sales representative who worked on jet-engine sales in China.

The SEC issued a subpoena for documents and notified the company about the probe on April 7, according to a company filing April 25. United Technologies said it is “cooperating fully.”

The engine unit suspended payments to the salesperson, triggering a lawsuit and an arbitration claim, which the company is contesting, it said.

“We do not believe that the resolution of the lawsuit or the arbitration will have a material adverse effect on our competitive position, results of operations, cash flows or financial condition,” United Technologies said in the filing.

A spokesman for the SEC declined to comment.

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