BOE Bonus Sidestep, FDA-India Generics, Swaps: Compliance

The Bank of England will discuss how banks in the U.K. sidestep the European Union bonus cap at a meeting this month with other regulators, three people with knowledge of the talks said.

The BOE’s Prudential Regulation Authority, which supervises lenders, will share information on so-called role-based pay at a meeting at the European Banking Authority’s London headquarters, said the people. Other regulators from the EU will also review how the bonus cap is applied.

Under EU rules, banks are banned from paying bonuses more than twice an employee’s salary. Some lenders with U.K. operations have created a sliding scale of staff seniority to avoid the pay restrictions. Martin Wheatley, the U.K.’s top markets watchdog, criticized the practice to lawmakers in London this week.

The EU pledged to monitor “very closely” the EBA’s capital requirements to be sure the rules on bonuses are “correctly implemented,” a commission spokeswoman said in an e-mail, noting that strict compliance is expected.

Compliance Action

Top U.S. Drug Regulator to Raise Quality Concerns in India

Food and Drug Administration Commissioner Margaret Hamburg said she will visit India beginning Feb. 10 to talk with generic-drug makers and regulators about quality concerns and plans to expand overseas inspections to address the country’s growing role in producing medicines sold in the U.S.

Hamburg said she will ask the drug firms and Indian regulators to “build new partnerships” with the goal of reducing the sanitation and testing issues that have led to recent bans on Indian manufacturing plants. India is the second-biggest drug provider to the U.S.

India’s drugs controller general, G.N. Singh, is scheduled to meet Hamburg during her trip. While the local regulator wants to “harmonize” with the FDA to ensure safer drugs, India must balance the need for more stringent regulations with an obligation to produce low-cost drugs, Singh said in an interview.

Hamburg said she doesn’t plan to visit any drug facilities.

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BATS, Finra Enter Agreement on Market Surveillance

BATS Global Markets Inc. and the U.S. Financial Industry Regulatory Authority agreed to raise cross-market surveillance to 99 percent from 90 percent of U.S. equities trading.

Finra said it will be able to “detect and deter instances where a market participant engages in potentially abusive conduct.”

BATS merged with Direct Edge, which earlier entered into an agreement for market surveillance with Finra.


Ex-SAC Manager Martoma Guilty as U.S. Sweeps Insider Cases

Former SAC Capital Advisors LP fund manager Mathew Martoma was found guilty in the most lucrative insider trading scheme ever as federal prosecutors racked up a seventh conviction in their six-year probe of the hedge fund and its billionaire founder, Steven A. Cohen.

Jurors in Manhattan federal court found Martoma, 39, used secret tips on clinical trials of an Alzheimer’s disease drug to trade Wyeth LLC and Elan Corp. shares, reaping a $275 million benefit for the hedge fund. Martoma chose to risk a trial after rejecting U.S. offers of a deal for cooperation. He faces as long as 20 years in prison on the most serious counts.

The jury reached a verdict after less than three days of deliberations. The conviction follows a similar verdict against SAC Capital fund manager Michael Steinberg, found guilty in December of a different scheme at the hedge fund. He hasn’t been sentenced and may yet seek to strike a deal with the U.S.

Martoma’s conviction raises the possibility that he also may seek to cooperate against Cohen in exchange for leniency. He was allowed to remain free on bail until sentencing.

Cohen, 57, who denies wrongdoing, hasn’t been charged with a crime.

The case is U.S. v. Martoma, 12-cr-00973, U.S. District Court, Southern District of New York (Manhattan).

U.S. Said Near Deal With EU on Reprieve for Swap-Trading Rules

U.S. and European Union officials are nearing an agreement to grant EU swap-trading platforms a reprieve from Dodd-Frank Act rules set to take effect next week, according to two people with knowledge of the negotiations, who chose to remain anonymous.

The agreement would free trading facilities in the EU from U.S. rules for swap-execution facilities, or Sefs, at least temporarily, according to the people. The negotiations between the Commodity Futures Trading Commission and European authorities are still under way and the agreement could change before Feb. 15, when the rules on platforms take effect, the people said.

The international reach of CFTC rules has been contentious between the Washington-based regulator and financial firms operating around the world. Wall Street lobbying groups representing banks sued in December in an effort to limit the agency’s ability to impose rules outside the U.S.

The issue has caused traders outside the U.S. to avoid trading with U.S. firms, the International Swaps and Derivatives Association said.

The suit against the CFTC is SIFMA v. U.S. CFTC, 13-cv-1916, U.S. District Court, District of Columbia (Washington).

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