Invesco Fined, EU Stress Test, Libor Charges: Compliance

Invesco Perpetual was fined 18.6 million pounds ($31.3 million) for failing to comply with risk limits or tell clients about the use of derivatives as leverage in their funds.

Invesco Perpetual, the largest retail investment manager in the U.K., didn’t comply with investment limits over a four-year period until November 2012, leading to 5 million pounds in losses, the Financial Conduct Authority, the U.K. financial markets regulator, said yesterday in a statement.

The company received the regulator’s standard 30 percent discount for cooperating with the probe.

“The small number of impacted funds were fully reimbursed,” Invesco Perpetual Chief Executive Officer Mark Armour said in an e-mailed statement. “In this instance, we clearly fell short of the high standards we consistently strive to deliver.”

Compliance Policy

Australia Signs Agreement With U.S. on FATCA Compliance

Australia signed an agreement with the U.S. to help Australian financial institutions comply with the Foreign Account Tax Compliance Act, Treasurer Joe Hockey said.

The agreement is expected to “improve existing tax information-sharing arrangements between Australia and the United States, for the purpose of preventing tax evasion,” Hockey said in an e-mailed statement. It also “minimizes costs by simplifying due diligence requirements,” he said.

Qatar Issues Capital Standards for Financial-Services Companies

The Qatar Financial Markets Authority issued capital adequacy standards to ensure companies can “perform their business and use their assets” in the best way, the regulator said in an e-mailed statement, without specifying the standards.

The QFMA also issued new rules on licensing and regulating acquisitions and mergers and on corporate governance in venture and main markets, according to the statement.

Compliance Action

EU Bank Stress Test Has Shocks From Bonds to Eastern Europe

The strength of Europe’s banking system is about to be tested against a fictional doomsday scenario that includes a global bond rout and a currency crisis in central and eastern Europe.

The three-year outlook features “the most pertinent threats” to the stability of European Union banks and their potential impact on entire balance sheets, according to a draft European Banking Authority statement seen by Bloomberg News. The EBA is due to release the details today in coordination with the European Central Bank.

As the ECB is preparing to take over supervision of about 130 euro-area lenders starting in November, policy makers have chosen to reflect real-world developments like tensions over Ukraine in a bid for more credibility in the toughest stress tests to date.

For more, click here.

Ex-Barclays New York Traders Charged in Libor-Rigging Probe

Three former Barclays Plc derivatives traders in New York were charged by U.K. prosecutors with manipulating Libor, becoming the first U.S.-based bankers to be accused in the British probe.

Ryan Reich, Alex Pabon and Jay Merchant were charged with conspiracy to defraud, the Serious Fraud Office said in an e-mailed statement yesterday. The first court hearing for the three men, who are currently in the U.S., is scheduled for May 27 in London.

The charges brought to 17 the number of people accused in parallel U.S. and U.K. criminal investigations into manipulation of the London interbank offered rate, or Libor. Lawyers for the men declined to comment. They are being prosecuted in connection with suspected rigging of the U.S. dollar Libor, two people with knowledge of the situation said in February.


Levitt and Pritchard on the SEC’s Broken Windows Strategy

Arthur Levitt, former Securities and Exchange Commission chairman, Bloomberg board member and senior advisor to Carlyle Group, and Adam Pritchard, professor at the University of Michigan Law School, discussed the SEC’s “broken windows” strategy. Levitt called the strategy, which places an emphasis on accounting, “very constructive.”

They spoke with Bloomberg Law hosts June Grasso and Mark Mills on Bloomberg Radio’s “Morning Bloomberg Law Brief.”

To listen, click here.

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