Stiglitz Blocked, Morgan Stanley Data: Compliance

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Economist Joseph Stiglitz, the Nobel laureate who called for a tax on high-frequency trading, was blocked from a government panel that will advise regulators on issues facing U.S. equity markets, according to people familiar with the matter.

Stiglitz’s rejection shows the partisan infighting that has bogged down Securities and Exchange Commission Chair Mary Jo White’s plan to set up a panel of experts to advise the agency on topics ranging from rapid-fire stock trading to dark pools.

Republican Commissioner Daniel Gallagher opposed Stiglitz’s nomination in recent weeks as White sought to complete the list of participants, according to two people who asked not to be identified because the deliberations were private. Democratic Commissioner Luis Aguilar had pushed for Stiglitz, who has said high-frequency trading isn’t good for financial markets and should be curbed, possibly through a tax.

“I think they may not have felt comfortable with somebody who was not in one way or another owned by the industry,” Stiglitz said in a phone interview.

White said Jan. 3 that she will announce the members of the advisory market-structure committee in the coming days -- six months after she first proposed the idea together with a blueprint for renewed market oversight. Each of the five commissioners -- two Democrats, two Republicans and White, an independent -- was allowed to nominate one person to the panel. The commission then had to agree on the final list, which is expected to have more than 15 members.

Gallagher declined to comment on the panel, as did Gina Talamona, a spokeswoman for White.

The panel is expected to include representatives of Wall Street brokerage firms and academic researchers.

A former chief economist of the World Bank, Stiglitz argued in an April speech that high-frequency trading can make markets less efficient while driving other investors to cloak their orders by placing them away from exchanges using dark pools, leading to less transparency.

Compliance Policy

Credit Union Group Will Push New Congress on Tax Exemption

The National Association of Federal Credit Unions will press lawmakers for regulatory relief and stay “vigilant on the issue of preserving the credit union tax exemption,” the trade group said in a statement.

The exemption is the group’s top legislative priority this year, it said.

The group also will push for congressional action on retailer data breaches, improvements in the “restrictive field of membership requirements,” and for guaranteed credit union access to the secondary mortgage market, according to the statement.

Compliance Action

Morgan Stanley Fires Worker Accused of Stealing Client Data

Morgan Stanley fired an employee it said stole data, including account numbers, for as many as 350,000 wealth-management clients and posted some of the information online.

The bank alerted law enforcement and found no evidence that customers lost money, New York-based Morgan Stanley said yesterday in a statement. The firm said it detected account information for about 900 clients on an external website and “promptly” had it removed.

“Morgan Stanley takes extremely seriously its responsibility to safeguard client data, and is working with the appropriate authorities to conduct and conclude a thorough investigation of this incident,” the company said in the statement.

Regulators are pushing banks to be more vigilant about and to hold capital against so-called operational risk, potential harm to a firm’s business or reputation from human error, external threats, fraud and litigation.

Morgan Stanley didn’t name the fired employee. The bank said it’s notifying all potentially affected clients. The Federal Bureau of Investigation’s New York office is investigating the matter, according to a person familiar with the matter who didn’t want to be identified because the probe isn’t public.

Moonpig Security Flaw Probed by U.K. Data Privacy Watchdog

A security problem at online greeting-card company Moonpig that risks exposing people’s personal data is being probed by the U.K. privacy regulator.

“We are aware of the incident at Moonpig and are looking into the details,” the U.K. Information Commissioner’s Office said on Twitter today.

Photobox Group’s Moonpig unit shut down its mobile applications after discovering a security flaw that could expose users’ data, including addresses, dates of birth and credit card details, Business Insider reported.

Customer password and payment information “is and has always been safe,” Moonpig said in an e-mailed statement sent via FTI Consulting.

“The security of your shopping experience at Moonpig is extremely important to us and we are investigating the detail behind today’s report as a priority,” the company said in the e-mail.

As a precaution, apps will be unavailable for a time while the company investigates, Moonpig said.

“We will work to resume a normal service as soon as possible. The desktop and mobile websites are unaffected,” it said in the e-mail.

(Updates with Moonpig U.K. privacy probe in Compliance Action. To be sent this column daily, click SALT COMPRPT.)
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