Volcker Rule, Muni Pricing, Google Settlement: Compliance

U.S. regulators implementing Volcker Rule curbs on banks’ trading formed an interagency group to coordinate efforts and reduce chances for companies to play for advantage by exploiting differences.

Top officials of the Federal Reserve, Federal Deposit Insurance Corp. and three other agencies outlined plans for the group in remarks prepared for a House Financial Services Committee hearing yesterday. The regulators were expected to testify amid criticism from Republican committee members that the rule adopted Dec. 10 will stunt economic growth and job creation.

The group was formed in response to complaints from industry groups and lawmakers over the complexity of the rule and potential inconsistencies among the agencies. It first met Jan. 23.

The Volcker Rule trading restrictions were among the most contentious measures arising from Dodd-Frank, passed by a Democratic-led Congress in response to the 2008 credit crisis. Republicans who took control of the House in 2012 elections have targeted the rules -- designed to stop banks from speculating with their own capital and to cut investments in private-equity and hedge funds -- as part of a broader attack on the regulatory overhaul.

Compliance Policy

Nasdaq CEO Sees Winning SEC Approval for Private Market Soon

Nasdaq OMX Group Inc. anticipates winning final approval for its market for closely held companies this month and hopes to open the venue in early March, Chief Executive Officer Robert Greifeld said during an interview yesterday.

Nasdaq Private Market, if cleared by the U.S. Securities and Exchange Commission, would give investors and employees of closely held companies a place to buy and sell shares while letting corporations avoid the disclosure and compliance requirements that come with being publicly traded.

Nasdaq hopes to succeed where others failed. While Facebook Inc.’s 2012 stock market debut helped spark a boom in U.S. IPOs, it also slowed private share exchanges because Facebook insiders no longer needed their services. A barrier to success was reduced in 2012 with the Jumpstart Our Business Startups Act, which quadrupled the number of shareholders a company could have before it needed to disclose financials.

The JOBS Act could persuade more companies to remain private, Greifeld said at a conference in December. Because of the legislation, companies don’t have to start revealing financial information until they have 2,000 shareholders, and employees aren’t counted. It used to be 500, including employees. Once a company is forced to disclose financials, the pressure to list shares publicly mounts.

Muni Regulator to Set New Rules on Best Pricing, Chairman Says

The Municipal Securities Rulemaking Board will propose new rules requiring dealers to seek best pricing on state and local government bond trades, Chairman Daniel Heimowitz told reporters on a conference call.

The regulator will propose “best execution” rules for the first time in the muni market, to be modeled on similar rules applying to equities.

The new regulations would be more specific than current muni rules covering fair dealing.

The rules are aimed at instilling confidence in trading among individual investors, Heimowitz said.

Compliance Action

Arrow Electronics Received Civil Investigative Demand From FTC

Arrow Electronics Inc., a distributor of computer components to industrial and commercial customers, said it received a civil investigative demand, or CID, on Jan. 21 in connection with a Federal Trade Commission investigation.

The probe relates to the use of a database program that has operated for more than 10 years under the auspices of the Global Technology Distribution Council, the company said.

The CID seeks information, and no proceedings have been instituted.

Arrow Electronics conducted a preliminary review and doesn’t have a reason to believe that there has been any conduct by the company or its employees that would be actionable under antitrust laws, it said. The company said it “understands” that other members participating in the database program have received similar CIDs.


EU’s Almunia Says Google Accord Gives Users ‘Real Choice’

European Union Competition Commissioner Joaquin Almunia spoke at a news conference in Brussels about the settlement reached with Google Inc. to end the EU’s three-year antitrust probe after the company made an improved offer to display results from rival search services.

Google will avoid EU fines and any finding that it discriminated against competing sites, a year after the U.S. Federal Trade Commission dropped a similar investigation by saying Google was motivated more by innovation than by trying to stifle competition.

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Ponzi Scams at ‘Unprecedented’ Level, CFTC’s Chilton Says

Bart Chilton, a commissioner with the Commodity Futures Trading Commission, talked about financial regulation and the outlook for the CFTC.

Chilton spoke with Stephanie Ruhle and Phil Mattingly on Bloomberg Television’s “In the Loop.” Carson Block, founder of Muddy Waters LLC, also spoke.

For the video, click here.

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