MSRB Broker Rules, Levitt-Weil on SEC, Alstom: Compliance

U.S. securities regulators proposed stricter rules on brokers in the $3.7 trillion municipal-debt market designed to prevent investors from being shortchanged when trading state and local government bonds.

The rules, released yesterday by the Municipal Securities Rulemaking Board, would require that brokers seek to trade at the most favorable prices possible for clients in the municipal-bond market, which lacks a centralized exchange. Brokers would have to check prices on various platforms before trading.

The MSRB said the step may boost competition among brokerage firms and reduce investor trading costs. Similar requirements already exist in the corporate bond market.

The proposal requires approval by the Securities and Exchange Commission.

EU Financial-Transaction Tax’s Support Wanes on Scope, Ligi Says

A proposed European Union financial-transaction tax is losing support as its expected scope shrinks, Estonian Finance Minister Juergen Ligi told reporters in Tallinn yesterday.

The tax no longer looks likely to raise much money for nations that take part, and the prospect of fewer participating nations also raises concerns about the tax’s impact on competition, Ligi said. The EU is working with 11 of its 28 nations on the transaction-tax plan, after a proposal covering all countries failed.

EU finance ministers discussed the topic in Brussels this week.

Ligi said he doesn’t support the current scope of the tax, which he says isn’t targeted at the riskiest trades and doesn’t exempt retirement funds.

France and Germany have led the campaign to move forward on the tax.

Compliance Action

Alstom Said to Face U.K. Bribery Charge From Five-Year Probe

Alstom SA, the French maker of trains and power equipment, will be charged in the U.K. over bribery allegations after a five-year investigation, according to two people with knowledge of the case.

The company has been the subject of corruption investigations in the past five years spanning France, Switzerland, Brazil and the U.S., and was fined 38.9 million Swiss francs ($43.8 million) in 2011 by the Swiss Attorney General’s office. The French inquiry was closed in 2009.

The company faces penalties ranging from a fine to a ban from competing for public contracts in the European Union, if it’s successfully prosecuted.

Claire Biau, a spokeswoman for Alstom, declined to comment.


Turning Blind Eye to Tip Source No Protection From Insider Cases

U.S. prosecutors may bring charges for ignoring the source of illegal information used for trading, an appeals court ruled in its second decision in as many days widening the scope and penalties for insider cases.

The ruling came in an appeal by Whitman Capital LLC hedge fund founder Doug Whitman. The U.S. Court of Appeals in New York yesterday rejected his argument that the judge improperly instructed the jury on how to consider the issue of willful blindness at his insider trading trial, where he was convicted for trading on illicit tips he said he received from a neighbor, a former Intel Corp. executive.

The U.S. Securities and Exchange Commission also won a ruling on Feb. 18 that may allow it to collect illegal proceeds from money managers who engaged in insider trading even when their firms got all the profit.

The criminal case is U.S. v. Whitman, 12-cr-00125, U.S. District Court, Southern District of New York (Manhattan); the appeals case is U.S. v. Whitman 13-491, U.S. Court of Appeals for the Second Circuit (Manhattan).

For more, click here.


Arthur Levitt Talks With Jonathan Weil About SEC Enforcement

Arthur Levitt, the former chairman of the U.S. Securities and Exchange Commission, interviewed Jonathan Weil, a Bloomberg finance columnist, on Bloomberg Radio’s “A Closer Look With Arthur Levitt.”

They talked about enforcement policies of SEC Chairman Mary Jo White. Her “refusal to accept neither-admit-nor-deny pleas that have been so bothersome to American investors” is a sign of tougher enforcement, according to Levitt.

“On this admit-nor-deny, a lot of it is optics,” Weil said, adding that in some cases agreements are silent as to admissions of wrongdoing.

To listen, click here.

Senate Hearing Will Focus on Offshore Tax-Evasion Crackdown

The Senate Permanent Subcommittee on Investigations will hold a hearing on Feb. 26 focusing on the U.S. crackdown on offshore tax evasion.

Witnesses at the hearing will include representatives from a Swiss bank and the U.S. Justice Department, according to a statement by the committee, which is led by Senator Carl Levin, a Michigan Democrat. The hearing will continue the “examination of tax haven bank facilitation of U.S. tax evasion,” according to a statement on the subcommittee’s website.

Before it's here, it's on the Bloomberg Terminal.