RBS Russia Loans, Taiwan Dim Sum, Lions Gate: Compliance

Royal Bank of Scotland Group Plc, Britain’s largest state-owned lender, said it’s cutting lending to Russian companies, following European banks including Societe Generale SA and Natixis SA in complying with the latest round of sanctions over Ukraine.

Exposure to Russian companies is 2.1 billion pounds ($3.5 billion) as “limits have been cut and credit restrictions introduced,” RBS said Aug. 1. Societe Generale’s Deputy Chief Executive Officer Severin Cabannes said the bank will refrain from doing new business with Russian clients, while Natixis CEO Laurent Mignon is putting some activities on hold.

The European Union followed the U.S. in putting more pressure on Russia’s financial system in an effort to force President Vladimir Putin to end support for separatists in eastern Ukraine. The bloc said July 31 it will prohibit Russian state-owned lenders including Sberbank and VTB Group from selling shares or bonds in the EU.

Western countries hardened their stance against Russia after a Malaysia Air jetliner crashed in a rebel-held area of eastern Ukraine last month, killing all 298 people aboard.

Compliance Policy

Taiwan Eases Rules on Brokerage Trading in Dim Sum Bonds

Brokerages can now buy or sell Dim Sum bonds in Taiwan, GreTai Securities Market said in a statement on its website.

Dim Sum bonds are denominated in Chinese yuan and issued in Hong Kong. Brokerages need to provide information on Dim Sum bonds before a domestic trade, according to the statement.

Russian Finance Ministry Proposes Ban on Virtual Currencies

Russia’s Finance Ministry proposed a ban on virtual currencies, stating they contribute to the development of “gray” sectors of the economy and money laundering, according to a draft decree by the ministry on a government website.

The ministry suggested in the proposal that issuance of virtual currencies and any operations with them should be banned in Russia.

Central bank First Deputy Chairman Georgy Luntovsky has urged caution in dealing with new crypto-currencies. At a conference in St. Petersburg last month, he expressed his concern about their use by criminals in Russia.


Wyly Penalty Phase Begins as Judge Inquires Into Cost of Scheme

Three months after a U.S. jury found Samuel and Charles Wyly used a web of offshore trusts to illegally hide stock holdings and evade trading limits, a judge will now decide just how much that wrongdoing is worth.

The brothers, founders of Michaels Stores Inc., perpetrated a fraud that earned them at least $550 million in illegal trading profits over 13 years, jurors in Manhattan federal court found. U.S. District Judge Shira Scheindlin will preside over a second trial set to start today in which she will determine how much Samuel Wyly and the estate of his late brother Charles, who died in 2011, should have to pay in fines and disgorgement.

The Securities and Exchange Commission’s trial victory was followed last month by a request for $1.41 billion in damages. The regulator alleged the brothers earned $553 million in “breathtaking” profits they didn’t disclose to investors. The amount drew criticism from Scheindlin, who directed the agency to come up with a smaller number.

The Wylys took issue with the SEC’s figures, arguing that penalties, if imposed at all, should at the most be “approximately $450,000.”

Scheindlin ordered the agency to submit a lower damages request by Aug. 12.

Samuel Wyly testified in April that he didn’t violate federal securities laws. The Wylys claimed they used the offshore trusts for lawful purposes.

The case is SEC v. Wyly, 10-cv-05760, U.S. District Court, Southern District of New York (Manhattan).


Wheeler Says Risk of Bank Fines Prove Hard to Quantify

Chris Wheeler, banking analyst at Mediobanca SpA, discussed the litigation risk to European banks and fixed-income revenue and the difficulty in gauging the level of risk for investors.

He talked with Guy Johnson on Bloomberg Television’s “The Pulse.”

For the video, click here.

Executive Pay

Lions Gate Amends Proxy After Underreporting Feltheimer Pay

Jon Feltheimer, the chief executive officer of Lions Gate Entertainment Corp., the studio that distributed the “Hunger Games” movies, received $2.7 million more in compensation last year than his company reported in a proxy statement released July 29.

A grant of 94,971 restricted stock units awarded in January was undervalued by 91 percent, a Bloomberg News review of the U.S. Securities and Exchange Commission filing shows.

“We inadvertently applied Black Scholes rather than fair value,” Peter Wilkes, a Lions Gate spokesman, said in a phone interview July 31, referring to the options-pricing method the company used to value the restricted shares.

The company filed an amendment to its proxy Aug. 1 that shows Feltheimer was paid $66.3 million in fiscal 2014. That brings him within $1 million of CBS Corp. CEO Leslie Moonves, who received $66.9 million.

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