Smith & Wesson, Harbinger, Lloyds, Pensions: ComplianceEllen Rosen
Smith & Wesson Holding Corp. agreed to pay about $2 million to settle U.S. regulatory claims that it bribed officials in Pakistan, Turkey and other countries to win firearms contracts.
Smith & Wesson employees made improper payments from 2007 to 2010 to secure business with militaries and police departments, the U.S. Securities and Exchange Commission said in an administrative order filed yesterday. The gunmaker settled the claims without admitting or denying the allegations.
The case was triggered in part by a sting operation by the Justice Department that led to the arrest of 22 law-enforcement and military-equipment dealers in 2010, including the company’s then vice president of international sales, R. Patrick Caldwell, according to company filings. Caldwell was acquitted by a federal jury in January 2012, and prosecutors declined to pursue charges against the company.
Liz Sharp, vice president of investor relations at Smith & Wesson, didn’t immediately respond to a phone call seeking comment on the case.
Ex-Harbinger Executive Settles SEC Claims of Aiding Falcone
Harbinger Capital Partners LLC’s former chief operating officer settled U.S. regulatory claims that he helped the hedge fund’s owner, Philip Falcone, misappropriate about $113 million to pay personal taxes.
Peter Jenson, 48, agreed to pay $200,000 and to be barred from the securities industry for at least two years, the Securities and Exchange Commission said in a statement yesterday. Jenson admitted wrongdoing as part of the settlement, which still must be approved in federal court.
“Jenson assisted a fraudulent scheme that allowed Falcone to put his own interests ahead of investors by engaging in a related-party loan on favorable terms,” said Julie Riewe of the SEC’s enforcement division. “We hold accountable not only those who perpetrate a scheme, but also those who enable them.”
Falcone was accused by the SEC in 2012 of fraudulently obtaining $113.2 million from a hedge fund that he advised and using the money to pay his personal taxes. Falcone authorized the transfer of assets to himself in a transaction that Jenson helped structure, the SEC said. Falcone, who later repaid the loan with interest, never sought or obtained consent from investors, according to the agency.
Falcone and Harbinger agreed to pay $18 million last year and admit wrongdoing to settle the claims. He was barred from the securities industry for at least five years.
Charles Clark, an attorney for Jenson at Kirkland & Ellis LLP, didn’t immediately return a phone call seeking comment on the settlement.
Lloyds Attacked by Carney as Bank Hit With $383 Million Fine
Lloyds Banking Group Plc’s manipulation of benchmark interest rates was branded “reprehensible” by Bank of England Governor Mark Carney as the lender agreed to pay 226 million pounds ($383 million) in fines and redress.
The U.K. bank, rescued by taxpayers during the financial crisis, will pay 105 million pounds ($178.3 million) to Britain’s Financial Conduct Authority, $105 million to the U.S. Commodity Futures Trading Commission and $86 million to the U.S. Justice Department, according to statements yesterday.
The lender also paid 7.8 million pounds ($13.25 million) to the BOE after its traders’ actions cut the fees banks paid for an aid program of which Lloyds was one of the biggest beneficiaries.
“Such manipulation is highly reprehensible, clearly unlawful and may amount to criminal conduct on the part of the individuals involved,” Carney, 49, said in a July 15 letter to Lloyds Chairman Norman Blackwell that was released yesterday. In his reply, Blackwell pledged to make good all the BOE’s losses and called his traders’ behavior “truly shocking,” occurring when the bank was “on a lifeline of public support.”
Lloyds’s fine is the fifth-biggest of the seven firms to reach a settlement with U.S. and U.K. regulators probing how traders colluded to rig the London interbank offered rate and related benchmarks to profit from their own derivatives bets.
UBS AG paid the most at $1.5 billion, including an agreement with Swiss regulators, while Barclays, the first to settle, paid $451 million and Royal Bank of Scotland Group Plc about $612 million, according to data compiled by Bloomberg.
Libor is one of a series of benchmarks in markets from gold to foreign exchange being scrutinized by regulators for possible manipulation by the banks that help set them.
The bank said in an e-mailed statement that it “condemns the actions of the individuals responsible” and is considering “all the remuneration implications and potential actions available to it.”
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UBS, Deutsche Bank Cooperating in High-Frequency Trading Probes
UBS AG said the U.S. Securities and Exchange Commission is investigating its dark pool, while Deutsche Bank AG is responding to requests for information from regulators on high-frequency trading.
The SEC has been investigating UBS’s private-trading venue since early 2012, the Zurich-based bank said in the litigation note of its quarterly report today, the first time it has acknowledged the probe. Frankfurt-based Deutsche Bank also said it received requests for information from undisclosed regulators on high-frequency trading without elaborating.
UBS’s dark pool was the second-biggest by U.S. shares traded in the week starting July 7 behind Credit Suisse Group AG, according to data published by the Financial Industry Regulatory Authority yesterday. Deutsche Bank’s alternative trading system ranked fifth-biggest in the week, with Barclays Plc paring some losses following a lawsuit by New York for allegedly lying to customers of its private exchange.
The bank said it has also received inquiries from the office of the New York Attorney General and the Financial Industry Regulatory Authority, and is cooperating with all of them.
Dark pools are alternative trading systems where transactions are concealed from the public. They were created as a haven for institutional investors seeking to trade large blocks of shares in secret, hoping to minimize their impact on prices so they can get a better deal on their trades.
UBS executives declined to comment on details of the SEC investigation on a conference call today.
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Los Angeles Board Strikes Down City’s Bid to Roll Back Pensions
Los Angeles officials violated the law when they rolled back pension benefits for new employees in 2012, the city Employee Relations Board ruled, jeopardizing as much as $4.3 billion in projected savings over 30 years.
Leaders of the second-largest U.S. city failed to properly consult with municipal-employee unions before pushing through the changes in a 10-0 City Council vote in October 2012, the five-member panel decided yesterday.
“The Employee Relations Board affirmed today the basic concept that one side cannot change a contract by itself,” said Scott Mann, a spokesman for the Coalition of L.A. City Unions.
Yusef Robb and Jeff Millman, spokesmen for Mayor Eric Garcetti, weren’t immediately available for comment.
Without reducing pensions for new employees, Los Angeles faced a 45 percent increase in its contribution toward employee pensions and the unfunded liability of the fund itself, City Administrative Officer Miguel Santana said in a 2012 report.
The reduced pensions, along with raising retirement ages and income caps, would save $3.9 billion to $4.3 billion over 30 years, according to the report.