BNP Paribas, U.K. Fraud Raids, Taiwan Rules: Compliance

BNP Paribas SA has given investors scant information about how much it expects to pay to settle a criminal probe of U.S. sanctions violations.

The bank told shareholders at an annual meeting on May 14 that the settlement might be significantly more than the $1.1 billion it had set aside for the case. On May 29, Bloomberg News, citing a person familiar with the matter, reported that U.S. authorities have demanded more than $10 billion. Since then, the bank hasn’t provided additional information about the possible size of a settlement.

BNP Paribas, France’s largest bank, isn’t required under international or U.S. accounting standards to disclose more. The bank is scheduled to report earnings on July 31. The lender, which has said it’s cooperating with U.S. authorities, declined to comment on the investigation and its disclosures.

Companies have traditionally been reluctant to disclose much about pending litigation, saying it undermines their negotiating position by tipping the other side about the minimum they expect to pay.

Compliance Policy

China Seeks Opinions on Rules to Ban Intellectual-Property Abuse

China is seeking public opinion on rules banning the abuse of intellectual-property rights to restrict competition, according to a statement on the central Chinese government website.

The rules are intended to boost transparency in anti-monopoly law enforcement, according to the statement.

The deadline for feedback is July 10.

Compliance Action

High-Speed Trading Practices Probed by U.S. Senate Panel

U.S. stock exchanges and brokers who use obscure incentives and fees to promote high-speed trading face questioning about those practices today as senators examine whether they pose a conflict of interest and harm investors.

Executives from Intercontinental Exchange Inc., owner of the New York Stock Exchange, Bats Global Markets Inc. and TD Ameritrade Holding Corp. are under scrutiny by the Senate’s Permanent Subcommittee on Investigations. High-frequency traders now account for about half of U.S. stock trades.

Senator Carl Levin, the Michigan Democrat who leads the panel, called the hearing to examine conflicts of interest in equity markets that “threaten to damage investors and to erode the trust and confidence on which our free markets depend.”

The committee, known for highly publicized investigations of Wall Street following the 2008 credit crisis, scheduled the hearing amid increasing concern that stock markets and regulators’ ability to oversee them are in need of change.

Eric Schneiderman, the New York attorney general, also has subpoenaed high-speed traders as part of a probe into automated trading, a person familiar with the matter said in April.

U.K. Fraud Prosecutor Triples Raids After Collapse of Cases

The U.K. Serious Fraud Office tripled the number of raids it carried out in the past year, in a sign the agency is trying to rebuild its image as a tough prosecutor after years of collapsed cases.

The SFO conducted 26 raids from April 2013 to March 2014, compared with eight the year before, according to London-based law firm Pinsent Masons LLP.

That increase follows 12 months of no raids after searches in March 2011, when the SFO arrested U.K. property tycoons Vincent and Robert Tchenguiz. A London court ruled the search warrants were based on “unfair and unjustified” evidence. The case was dropped, and the brothers are suing the fraud office.

The SFO disputed that the Tchenguiz case had a chilling effect on raids carried out by the agency.

“The SFO conducts searches when our investigations require them,” said Jina Roe, a spokeswoman for the agency. “It is entirely normal for the volume of searches to fluctuate over time. There has never been a moratorium on searches.”

Taiwan to Tighten Rules on Chinese Companies’ Forming Branches

Chinese companies are required to have been operating for more than three years with more than NT$6 million ($200,000) of paid-in capital before establishing representative offices in Taiwan, according to a statement on the website of the Ministry of Economic Affairs.

The regulator won’t approve applications from Chinese to set up branches or representative offices in Taiwan if their businesses affect national security or financial stability, according to the statement.


Robert Heim Speaks About Appeals Court Reversal of Federal Judge

Robert Heim, a partner at Meyers & Heim LLP and a former assistant regional director of the U.S. Securities and Exchange Commission in New York, discussed how Citigroup Inc.’s $285 million mortgage-securities accord with the SEC was revived by the U.S. Court of Appeals in Manhattan, reversing a decision of U.S. District Judge Jed Rakoff. Heim talked with June Grasso and Mark Mills on Bloomberg Radio’s “Bloomberg Law.”

To listen, click here.

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