Barclays Charges, ECB, Facebook Subpoenas: Compliance

Antony Jenkins, promoted to run Barclays Plc after the Libor scandal, pledged to overhaul the bank’s culture, committing to values of integrity and respect. Allegations of fraud on his watch are undermining his plan.

Barclays lied to customers and masked the role of high-frequency traders as it sought to boost revenue at one of Wall Street’s largest private trading venues, New York Attorney General Eric Schneiderman said in a civil complaint filed June 25. He cited a pattern of misleading and false representations that went on as recently as April.

The first allegations of new misconduct since Jenkins was named chief executive officer in August 2012 mark a setback in his efforts to break with the past and sent shares plunging the most since he took over.

Jenkins said in a memo to staff June 26 that the lawsuit represents “serious charges that allege a grave failure to live up to our values and to the culture at Barclays which we are trying to create.”

“I will not tolerate any circumstances in which our clients are lied to or misled, and any instances I discover will be dealt with severely,” the CEO said.

Mark Lane, a spokesman for Barclays, said the bank is cooperating with Schneiderman’s office and is examining the matter internally.

Compliance Action

ECB Removes Three German Lenders From List of Significant Banks

The European Central Bank removed KfW IPEX Bank GmbH, IKB Deutsche Industriebank AG and Wuestenrot & Wuerttembergische AG from the list of supervised entities considered significant, the central bank said on its website.

The list of 21 ECB supervised entities includes Bayerische Landesbank, Commerzbank AG, Deutsche Bank AG, HASPA Finanzholding, HSH Nordbank AG, Hypo Real Estate Holding AG, Landesbank Berlin Holding AG, Landeskreditbank Baden-Wuerttemberg Foerderbank, Landwirtschaftliche Rentenbank, Muenchener Hypothekenbank AG, NRW Bank and Volkswagen Financial Services AG.

The ECB June 27 published a preliminary list for lenders to be directly overseen by the Single Supervisory Mechanism from Nov. 4.


Facebook User Data Sought by Manhattan D.A. in Fraud Probe

Facebook Inc. this month asked an appellate court to overturn an order issued last year by a judge that directed the social media company to turn over account information of 381 users who were investigated by the Manhattan District Attorney for cheating to obtain disability benefits.

The Fourth Amendment doesn’t permit the government to seize and “keep indefinitely” private messages, photographs and other communications of almost 400 people, most of whom will never know the government has their personal information, Facebook said in its June 20 filing.

The government brought disability fraud charges against only 62 of the Facebook users whose information is sought, according to a statement from Chris Sonderby, the company’s deputy general counsel.

The case is In re 381 Search Warrants Directed to Facebook Inc., 30207-13, New York State Supreme Court, Appellate Division, First Department.

U.K. Legal-Aid Cuts Delay Insider-Trading Trial for Six to 2016

Legal-aid cuts will delay until 2016 a trial for six men, including former Deutsche Bank AG Managing Director Martyn Dodgson, in the U.K.’s largest insider trading probe.

The September start date was pushed back by a London judge June 27 to January 2016 after government cuts left four defendants without trial lawyers for six months and delayed case preparation.

That will be almost six years since the British markets regulator led dawn raids in Operation Tabernula, Latin for “little tavern,” in March 2010, arresting seven men including Dodgson. Several Financial Conduct Authority cases have been stymied this year by government cuts to trial-lawyer fees, leaving defendants without representation.

Philip Morris Asks U.K. Court to Review EU Tobacco Directive

Philip Morris International Inc., the world’s largest publicly traded cigarette maker, asked a U.K. court to review whether European Union tobacco rules comply with EU law.

Philip Morris asked U.K. judges to take the matter to the European Court of Justice, the company said in a statement June 27.

The challenged directive came into force May 19 and EU member states have two years to implement the measures into national legislation. They include a pictorial health warning covering 65 percent of the pack, a prohibition on cigarette flavors, and a requirement for cigarette makers to track and trace their shipments to fight contraband tobacco.

Philip Morris said by banning menthol cigarettes, which would take effect in 2020, the directive disrupts the internal market because they are currently legal in all 28 EU member countries. The company said it expects the judicial process to take two to three years.

Frederic Vincent, a spokesman for the European Commission, which drafted the law, declined to comment.

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