BATS Near Settlement, Hyundai-Kia, U.K. Banks: Compliance

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BATS Global Markets Inc. is close to settling with U.S. regulators over accusations that Direct Edge, the stock exchange operator it bought in January, gave unfair advantages to high-frequency traders, according to a person familiar with the matter.

A settlement with the Securities and Exchange Commission is expected in the coming weeks, said the person, who asked not to be named because they weren’t authorized to speak publicly. It will probably be the largest fine imposed by a U.S. stock exchange operator, exceeding the $10 million Nasdaq OMX Group Inc. agreed to pay in May 2013 for issues related to Facebook Inc.’s initial public offering, the person said.

The SEC began an inquiry more than two years ago into order types and other facets of electronic equity markets. Critics including Haim Bodek, a former Goldman Sachs Group Inc. trader, allege that the fastest traders exploit preprogrammed equity instructions to the disadvantage of other investors.

Jim Gorman, a spokesman for BATS, declined to comment on the reported accord, as did an SEC spokesman, John Nester.

Compliance Policy

Nuclear Power, Banks to Gain as Republicans Take Congress

Republican control of Congress may boost nuclear power and give banks eased enforcement of consumer laws, though it’s unlikely to yield a rollback of Obamacare over objections of a veto-wielding president.

Oil pipeline builder TransCanada Corp. may find a way to advance the Keystone XL pipeline and communications companies such as AT&T Inc. could see progress toward updating a legal framework that predates widespread Internet use.

Success on these and other items backed by U.S. business will come only from negotiations between President Barack Obama and top leaders of the House and Senate, who in January will be Republican.

The end of a divided Congress won’t open the gate for every Republican-backed bill to become law. Senate Democrats retain the power to slow bills and Obama has the veto power. Republicans also could wield powers from the Congressional Review Act, which lets lawmakers vote to disapprove major rules before implementation. A simple majority is required, though Democrat Obama could veto any resolution.

The Consumer Financial Protection Bureau, created over the protest of Republicans and banks in 2010, might become a target for the Republican-controlled Congress. Also, JPMorgan Chase & Co., Bank of America Corp. and Wall Street firms will find the new Congress less likely to pursue penalties tied to the financial crisis that peaked in 2008. Democratic Senator Carl Levin, chairman of an investigations subcommittee, is retiring and it isn’t clear who will take over.

Another area of policy change could be on taxes. Republicans and Democrats disagree on fundamental questions such as whether a new tax code should raise more money for the federal government.

The Republican-controlled 114th Congress convenes Jan. 6.

Compliance Action

Inflated Mileage Claims to Cost Hyundai, Kia $350 Million

Hyundai Motor Co. and Kia Motors Corp. will pay the equivalent of $350 million to settle U.S. claims that they overstated fuel economy on the window stickers car buyers see at showrooms.

Korea’s two biggest carmakers, which share engines, model platforms and a chairman, will pay a $100 million fine, forfeit $200 million in greenhouse-gas emission credits and spend $50 million setting up independent tests to certify mileage claims, under the settlement with the U.S. Justice Department and Environmental Protection Agency.

The corporate penalty is the largest assessed under the U.S. Clean Air Act and comes as automakers are crafting ways to meet increasingly strict fuel-economy rules. Ford Motor Co. had to lower its fuel-efficiency estimates for certain models twice in less than a year, and the EPA last month required Daimler AG’s Mercedes-Benz unit to restate fuel economy on two C300 4Matic models.

Hyundai’s violations were larger and more systemic, EPA Administrator Gina McCarthy said Nov. 3 at a news conference in Washington with U.S. Attorney General Eric Holder.

“Hyundai has acted transparently, reimbursed affected customers and fully cooperated with the EPA throughout the course of this investigation,” David Zuchowski, president and chief executive officer of Hyundai Motor America, said in a statement. “We are pleased to put this behind us.”

U.K. Banks May Face Probe of Checking Accounts, Business Loans

U.K. antitrust regulators said they may open an investigation into checking accounts and banking services for small- and medium-sized businesses within days.

The Competition and Markets Authority will issue a decision on starting a full probe into banking for small firms and current account services Nov. 6, the London-based agency said in an e-mail. It said in July that it was considering an investigation because consumers lack effective options.

The U.K. government has said it wants increased competition and choice among retail banks amid criticism that fees aren’t clear and switching providers is difficult. The four largest lenders control more than three-fourths of the U.K. consumer banking market, the CMA said in July.

HSBC Holdings Plc, Europe’s largest bank, and Allied Irish Banks Plc’s First Trust Bank were criticized by regulators last month. The banks broke competition rules by forcing smaller companies to open accounts before they could borrow money, the CMA said.

Sky News reported that the CMA would open an in-depth probe yesterday.