Deutsche Bank-Dubai, Italian Banks, Twitter Impact

Deutsche Bank AG agreed to hand over documents related to a probe into the operations of its Dubai- based wealth management division after being taken to court by the emirate’s financial free zone regulator.

The Dubai Financial Services Authority began proceedings against the Frankfurt-based lender at the Dubai International Financial Centre Courts on Oct. 31 in an attempt to force the bank to comply with its investigation. Deutsche Bank agreed to submit the documents within 28 days and pay the regulator’s costs, the authority said Feb. 9 in a statement.

The regulator began investigating the bank in December 2012 for “suspected contraventions” of rules on due diligence, risk assessment requirements and controls, according to the October filing, made public on Nov. 17. Deutsche Bank said in the case that documents disclosing certain information would contravene Swiss law.

The DFSA said it will continue the investigation into Deutsche Bank’s wealth-management business, without giving more detail. Michael Lermer, a spokesman for Deutsche Bank in Dubai, declined to comment.

Compliance Policy

SEC Majority Wants to Review Exchanges’ Special Oversight Status

A majority of the five-member U.S. Securities and Exchange Commission wants the agency to review whether stock exchanges should continue to have regulatory roles that include overseeing members who may run competing venues.

Advocates of such a review say the special status creates benefits and burdens for exchanges such as IntercontinentalExchange Group Inc.’s New York Stock Exchange: They must compete with venues that don’t have to follow as many rules while also having a level of authority over brokers that operate the competing trading systems.

Exchanges’ self-regulatory functions are enshrined in the federal securities laws and predate the creation of the SEC in 1934. The exchanges held onto benefits from their special status such as the sale of lucrative market data and limits on private lawsuits against them, even as they became for-profit entities. At the same time, exchanges must publish and seek approval for their rules.

The Securities Industry and Financial Markets Association, which represents brokers, say the self-regulatory model also creates conflicts of interest for exchanges by asking them to regulate members that operate competing trading venues.

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Compliance Action

Italian Banks May Face Up to $20 Billion Capital Gap, ABI Says

Italian banks, which have raised money, sold assets and cut costs to boost capital, may face a shortfall of as much as 15 billion euros ($20 billion) as regulators scrutinize their balance sheets.

Giovanni Sabatini, general manager of the Italian banking association, said in an interview in Rome that he is confident the banks will pass the stress test exercise “without major problems.” He agreed with an estimate by the Bank of Italy of a potential capital shortfall of 10 billion to 15 billion euros, saying it’s “manageable.”

Assets of 15 Italian lenders, including UniCredit SpA and Intesa Sanpaolo SpA, are being reviewed by the European Central Bank as part of a comprehensive assessment before it takes over banking supervision for the euro area in November.

The stress test is the third and final stage of the ECB’s Comprehensive Assessment, an evaluation of whether lenders can survive a downturn. The nation’s banks are bolstering finances after Italy’s longest recession in two decades as low interest rates squeezed profit margins.

Teva Says U.S. Attorney Investigating Marketing, Sales of Drugs

Teva Pharmaceutical Industries Ltd., the world’s biggest maker of generic medicines, said federal prosecutors in New York are investigating its sales and marketing practices for two drugs.

The U.S. attorney in Manhattan sent the Israeli company a civil investigative demand for documents and information relating to the sales of Copaxone and Azilect from 2006 through the present, Teva said in its annual report, filed yesterday with the U.S. Securities and Exchange Commission.

“The demand states that the government is investigating possible civil violations of the federal False Claims Act,” Teva said. “Teva is in the process of complying with the subpoena.” A spokesman didn’t immediately respond to a request for further comment on the investigation.

Copaxone, an injection for multiple sclerosis, is Teva’s best-selling product, with sales of $4.3 billion last year. Azilect, a treatment for Parkinson’s disease, had sales of $493 million in 2013.


Levitt Says Twitter Impact on Trading Needs Examination

Arthur Levitt, former Securities and Exchange Commission chairman, said regulators need to take a look at the impact of social media on high frequency trading, in particular the question of Twitter feeds.

Levitt talked with Bloomberg’s Tom Keene and Michael McKee on Bloomberg Radio’s “Bloomberg Surveillance.”

For the audio, click here.

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