http://www.complinet.com/ Compliance Complete Australasia RSS feed en THOMSON REUTERS GRC en THOMSON REUTERS GRC http://www.complinet.com/global/news/news/article.html?ref=155429 Government officials in New Zealand have played down the impact of the European Union's decision to remove the country from its "white list" for jurisdictions with an equivalent anti-money laundering and terrorist finance regime. A senior official at the Ministry of Justice said the government had been surprised by the decision but and was working to restore New Zealand's position on the equivalency list. He also downplayed the impact that decision would have on New Zealand businesses, in terms of their costs of compliance or regulatory obligations. The EU white list was set up to simplify the due diligence process for financial institutions situated in countries that are believed to have equivalent AML/CTF regimes. The relief is set out in Article 11(1) of the EU Directive 2005/60/EC and takes into account reports by international bodies such as the Financial Action Task Force (FATF), International Monetary Fund and the World Bank. Being on the list does not override the need to Sun, 20 May 2012 23:15:35 GMT http://www.complinet.com/global/news/news/article.html?ref=155429 2012-05-20T23:15:35Z http://www.complinet.com/global/news/news/article.html?ref=155430 Reforms to banking competition could be pushed back to the second term of a Coalition government under plans to give the industry a respite from change in the wake of the global financial crisis. Opposition Treasury spokesman Joe Hockey is promising to hold off on major reforms as executives warn against a rush to overhaul the sector after what they regard as heavy intervention from Canberra. In a debate over the pace of change, executives are seeking a Coalition commitment of avoiding substantial change in the first term of government should Tony Abbott gain power at the election due next year. "What we're asking for is for them to leave us alone for a term, because we've had so much dropped on us," one executive told The Australian. The business community's message is that Labor's changes over the past few years have added to the uncertainty faced by banks and finance companies in the midst of the global downturn. Wayne Swan's attacks on the banks over their interest-rate Sun, 20 May 2012 23:09:27 GMT http://www.complinet.com/global/news/news/article.html?ref=155430 2012-05-20T23:09:27Z http://www.complinet.com/global/news/news/article.html?ref=155431 Federal officials have launched an inquiry into a retirement fund for meat industry workers amid concerns over claims of conflicts of interest on its board, escalating a row over the lack of standards for fund trustees. The prudential regulator sent investigators to the Meat Industry Employees Superannuation Fund in Melbourne last week after The Australian revealed that one of its trustees accepted payments from failed property company Austcorp. But the events also triggered a wider debate about lifting standards to ensure that those who oversee almost $1.3 trillion in retirement savings could be brought to account if they abused their positions. A union official on the fund's board, Wally Curran, received tens of thousands of dollars from Austcorp when the fund had invested up to $30 million in the company, The Australian was told Mr Curran denies any wrongdoing in accepting the payments. Financial Services Minister Bill Shorten expressed his concern about the affair to Sun, 20 May 2012 23:08:50 GMT http://www.complinet.com/global/news/news/article.html?ref=155431 2012-05-20T23:08:50Z http://www.complinet.com/global/news/news/article.html?ref=155432 A couple is continuing to operate their financial planning business despite them being banned from offering advice until 2014. Peter and Anne-Marie Seagrim have been slapped with a three-year ban after receiving incentives for moving $105 million of their clients' funds into embattled investment manager Trio Capital. But in a letter to their 4000 SA customers, the couple say they will continue to provide clients with the help they have been accustomed to. "Anne and I are still at work as directors of the firm and so, in that effect, it is business as usual," it says. Last year, the Australian Securities and Investments Commission banned the couple from providing financial advice until 2014 - a decision which has been appealed by the couple - but there is no rule preventing them being directors of their company, Seagrims. Trio's collapse was triggered by the failure of its Astarra Strategic Fund, which invested in "questionable overseas hedge funds", ASIC said. The Federal Sun, 20 May 2012 23:04:23 GMT http://www.complinet.com/global/news/news/article.html?ref=155432 2012-05-20T23:04:23Z http://www.complinet.com/global/news/news/article.html?ref=155433 A "tiring" case has come to a close with former Bridgecorp director Rob Roest sentenced to 6 1/2 years in prison last week, after his conviction on Crimes and Securities Act charges last month. Fellow former director Peter Steigrad received a sentence of nine months' home detention and was ordered to complete 200 hours of community services and pay $350,000 in reparation. As Crown prosecutor Brian Dickey said outside the court, he was pleased to see the lengthy case draw to an end. "We're not going to get much money back for investors by it but at least we might have got something for them by the results we've achieved," Dickey said. "It's been years actually and it's been very tiring for a lot of people at the FMA [Financial Markets Authority] and the prosecution, and for a whole lot of people, so it'll be nice to move on." Bridgecorp collapsed in July 2007 owing $490 million to 14,500 investors, who are expected to receive back less than 10 cents in the dollar. In Sun, 20 May 2012 23:03:25 GMT http://www.complinet.com/global/news/news/article.html?ref=155433 2012-05-20T23:03:25Z http://www.complinet.com/global/news/news/article.html?ref=155434 One of the many government reports that arrived during the week and passed almost unreported was the multi-party parliamentary report into the Trio-Astarra superannuation fraud, and more's the pity. We've long been told that those who ignore the lessons of history are bound to repeat them, and the Trio report is a good summary of the biggest scam yet perpetrated on the Australian super industry. The Parliamentary Joint Committee on Corporations and Financial Services' Inquiry into the Collapse of Trio Capital, available on the Parliament House website, www.aph.gov.au, is the sort of cautionary tale that deserves a wider readership. The scam started in 2004 after the purchase of a reputable funds manager, Tolhurst, by a shadowy group of new owners. By the time an alert local fund manager, John Hempton, tipped off Australian Securities & Investments Commission chairman Tony D'Aloisio in late 2009 about some uncannily smooth performance figures, about $176 million of members' Sun, 20 May 2012 23:02:18 GMT http://www.complinet.com/global/news/news/article.html?ref=155434 2012-05-20T23:02:18Z http://www.complinet.com/global/news/news/article.html?ref=155364 The Australian Securities and Investments Commission (ASIC) has warned against an increase in fraudulent businesses operating investment scams. Greg Tanzer, ASIC commissioner, said investors needed to be cautious when offered unsolicited investment advice. "I urge potential investors to carefully consider all investment opportunities and seek professional advice before making investment decisions," Tanzer said. The latest case involved an unlicensed financial services business called Dellingworth Pty Ltd which has been offering the opportunity to invest in Australian shares at a potential return of between 23 percent and 49 percent per annum. Investors were asked to take part in a seven-day, no obligation, free trial with an investment of $1,500, which they were told that Dellingworth would use to trade on their behalf. Those investors who accepted the offer were instructed to deposit their funds into a bank account in the name of Dellingworth Contract and were provided with a Thu, 17 May 2012 23:10:15 GMT http://www.complinet.com/global/news/news/article.html?ref=155364 2012-05-17T23:10:15Z http://www.complinet.com/global/news/news/article.html?ref=155391 Credit rating agencies have welcomed the proposed legislative framework for covered bonds in New Zealand, saying that it will give greater certainty to investors and issuers alike. New Zealand banks have been able to issue covered bonds for the past two years under "contractual arrangements". There was no legislative regime, however, covering critical issues such as how bondholders would be treated in a default. According to the government, the country needed to introduce a legislative framework to bring New Zealand into line with other jurisdictions where banks are able to issue covered bonds. It said this was putting local issuers at a disadvantage when trying to raise capital in international markets. According to Fitch Ratings, the legislative framework will also be beneficial for investors, although individual covered bond programmes will still need to be assessed on a case-by-case basis. The Reserve Bank of New Zealand (Covered Bonds) Amendment Bill, which was introduced Thu, 17 May 2012 23:10:07 GMT http://www.complinet.com/global/news/news/article.html?ref=155391 2012-05-17T23:10:07Z http://www.complinet.com/global/news/news/article.html?ref=155390 Commonwealth Bank chief executive Ian Narev has downplayed the prospect of a catastrophic hit to the financial system from Greece defaulting on its debts, arguing that banks have had time to prepare for the country's possible exit from the euro. Announcing a small increase in March-quarter cash profit from $1.7 billion to $1.75bn, Mr Narev said that, unlike the Lehman Brothers collapse in 2008 which almost toppled the banking system, a bad outcome on Greece had been a possibility for some time. "So I think there's a degree of forward planning for that possibility that would soften any impact," he said. "But the impact would still be material, I think." Like its rivals, CBA has maintained its conservative business settings as the European sovereign debt crisis takes another turn for the worse. The bank has also closely monitored counterparty risk, leading Mr Narev to declare yesterday that he was "very comfortable" with the bank's exposures. At some cost to its net interest Thu, 17 May 2012 23:08:40 GMT http://www.complinet.com/global/news/news/article.html?ref=155390 2012-05-17T23:08:40Z http://www.complinet.com/global/news/news/article.html?ref=155389 A US distressed debt investment company plans to buy up to $50 million in debts of collapsed broker MF Global Australia. CRT Special Investments hoped to lodge transfer forms with the liquidator, Deloitte, today, local representative Ross Anderson said last night. CRT is offering clients 80¢ in the dollar for CFD accounts and 75¢ for futures accounts. "There has been a lot of demand from clients who want to liquidate their positions," Mr Anderson said. He said there had been some complications with completing the "know your client" anti money laundering forms, but hoped this could be sorted out before the weekend. Other firms that have been making offers to clients include Macquarie Group, UBS, Longacre Fund Management and The Seaport Group. They declined to comment or could not be contacted yesterday. Australian clients of MFG are still owed $313 million, after it went into administration on October 31. Deloitte has recovered $240 million, but it is likely to be months before Thu, 17 May 2012 23:05:04 GMT http://www.complinet.com/global/news/news/article.html?ref=155389 2012-05-17T23:05:04Z http://www.complinet.com/global/news/news/article.html?ref=155356 More insider traders have been penalised in the past three years than in the previous decade, Australia's corporate regulator says. The Australian Securities and Investments Commission (ASIC) has made 11 convictions for insider trading in the three years to December 2011 and is awaiting results from a further seven cases. This compared with 15 cases, resulting in 10 insider trading convictions, in the decade to 2008. The result is a combination of a rising number of illegal trades and greater surveillance by ASIC, deputy chairman Belinda Gibson said. Ms Gibson said ASIC received about 200 alerts a day in relation to suspicious trading activity regarding the use of privileged information unavailable to the general market. "The rise in prosecutions can be put down to greater surveillance by ASIC and in some cases greater temptations for investors," Ms Gibson said. "We're much better at looking for those cases and prosecuting them. What we have done since 2008 is really focus Thu, 17 May 2012 00:39:26 GMT http://www.complinet.com/global/news/news/article.html?ref=155356 2012-05-17T00:39:26Z http://www.complinet.com/global/news/news/article.html?ref=155355 Australia's top fraud-fighting agencies have been called to account for their failure to pursue those responsible for stealing $176 million in Australia's largest superannuation theft. A federal parliamentary committee said the masterminds appeared to be facing no further criminal investigation, leaving investors in Australia's $1.3 trillion superannuation pool "a ripe target". The joint parliamentary inquiry found that the 2009 collapse of the Albury-based Trio Capital was the "largest superannuation fraud in Australian history", affecting more than 6000 investors. They had placed money through Trio Capital into two hedge funds, Astarra Strategic and ARP Growth, which siphoned their money to obscure Caribbean tax havens to the apparent benefit of a Hong Kong resident, Jack Flader. The committee found that Mr Flader had never been interviewed or pursued in a criminal investigation by Australian authorities. It also found the investment manager of the ARP Growth fund, Paul Wed, 16 May 2012 23:04:35 GMT http://www.complinet.com/global/news/news/article.html?ref=155355 2012-05-16T23:04:35Z http://www.complinet.com/global/news/news/article.html?ref=155357 The Australian Securities & Investments Commission has moved to clarify issues raised by Leighton Holdings around downstream takeovers by updating guidance that was first issued in 1993. The guidance update incorporates changes to the law since then and aims to provide an insight into ASIC's reasons for referring particular cases to the Takeovers Panel or offering relief from the law. Governance expert Martin Lawrence of Ownership Matters said the regulator was going through a process of refreshing takeover guidance generally, and was providing examples of circumstances where companies could expect to attract their attention. He said that at the heart of the matter was the question of whether shareholders should be paid a premium if control is passed from one entity to another by way of a takeover. Leighton Holdings unsuccessfully put this argument to the Takeovers Panel last year when Spanish construction company ACS took control of Hochtief, Leighton's largest single shareholder. Wed, 16 May 2012 23:02:46 GMT http://www.complinet.com/global/news/news/article.html?ref=155357 2012-05-16T23:02:46Z http://www.complinet.com/global/news/news/article.html?ref=155336 The International Organization of Securities Commissions (IOSCO) will take tougher measures to encourage members who have not yet signed its Multilateral Memorandum of Understanding (MMoU) to do so. The global body is also streamlining its organization and seeking ways to beef up its finances. IOSCO's annual conference in Beijing approved a resolution allowing it to take tougher measures to encourage compliance by members who have not yet signed the MMoU, a tool to help ensure effective global securities regulation and preserve and strengthen securities markets around the globe. IOSCO said the new powers were designed to assist non-signatories in overcoming the obstacles they often encountered in securing support from their own governments or legislatures for implementing the legal and regulatory changes required for compliance with the MMoU. Mark Steward, executive director of enforcement at the Hong Kong Securities and Futures Commission said the MMoU had created "a groundswell Wed, 16 May 2012 05:59:46 GMT http://www.complinet.com/global/news/news/article.html?ref=155336 2012-05-16T05:59:46Z http://www.complinet.com/global/news/news/article.html?ref=155307 A federal parliamentary committee has slated two of Australia's main financial regulators for failing to respond more quickly to the Trio Capital superannuation fraud, which cost investors an estimated $176 million. The committee released its report on Australia's largest superannuation fraud this morning, saying that the case exposed shortcomings in the regulatory regime and the agencies that are responsible for protecting investors. The report said both the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA) had to accept "their share of the blame" for not detecting the fraud and acting to protect investors earlier. The fraud was identified by John Hempton, a Sydney-based hedge fund manager who used to work for the Treasury Department. The committee said that the Trio case had exposed extensive problems with the "key checks and balances" in the Australian financial and superannuation system, which did not work to identify Tue, 15 May 2012 23:39:27 GMT http://www.complinet.com/global/news/news/article.html?ref=155307 2012-05-15T23:39:27Z http://www.complinet.com/global/news/news/article.html?ref=155311 The liquidator of collapsed stockbroker MF Global Australia has warned clients to obtain independent advice before selling their positions to third parties, a process that could begin as early as this week. Deloitte yesterday released standardised documentation that will enable any of the 11,000 clients to transfer their accounts to distressed debt buying firms which have offered to buy debts for below face value. Clients who traded in futures and contracts for difference through MF Global are owed $313 million after it went into administration on October 31. It is likely to be some months before any of the $240 million recovered so far is returned to clients. Some are under financial stress and want to liquidate their positions. Distressed debt buyers such as Macquarie Group, UBS, CRT Capital Group, Longacre Fund Management and The Seaport Group have offered to pay 70¢ to 80¢ in the dollar for client accounts. Joint liquidator at Deloitte, Vaughan Strawbridge, said last Tue, 15 May 2012 23:09:15 GMT http://www.complinet.com/global/news/news/article.html?ref=155311 2012-05-15T23:09:15Z http://www.complinet.com/global/news/news/article.html?ref=155308 Melbourne liquidator Andrew Dunner is in ASIC's sights, with the regulator applying to the Federal Court to inquire into his conduct as a liquidator or receiver and manager of 11 companies. The Australian Securities & Investments Commission said yesterday it would seek court orders to ban Mr Dunner from being a liquidator. ASIC will also seek orders for Mr Dunner to pay into court any remuneration he received as the liquidator of eight companies, if the money was paid without the approval of creditors, a court or a committee of inspection. The money will also be forfeited if the court finds that he performed work outside the period of the liquidation. Mr Dunner yesterday notified ASIC that he had stepped aside from the three ongoing liquidations that are part of the regulator's application. The companies are Red Earth Facade Systems, Rayunit and Emberford. At yesterday's hearing, Federal Court judge John Middleton ordered Mr Dunner to file any response to ASIC's Tue, 15 May 2012 23:08:01 GMT http://www.complinet.com/global/news/news/article.html?ref=155308 2012-05-15T23:08:01Z http://www.complinet.com/global/news/news/article.html?ref=155306 Banks and big fund managers would have to reveal billions of dollars in superannuation fees if a union push for stricter controls on the executives who manage workers' savings is successful. The policy to be signed off today at the ACTU congress is aimed at retail funds worth $360 billion and the union movement hopes it will be incorporated into draft legislation scheduled to become law within months. The ACTU cites figures from the prudential regulator to argue that retail funds like AMP and BT are using related-party transactions that force up fees. While the ACTU signalled some of its plans two weeks ago, the move on related-party transactions adds a new twist to the debate by highlighting the way trustees at big retail funds are often employees of the financial conglomerates that generate fees from the funds. ACTU assistant secretary Tim Lyons said the policy would encourage all funds to reveal how much they paid to related entities to manage their money. "With service Tue, 15 May 2012 23:07:34 GMT http://www.complinet.com/global/news/news/article.html?ref=155306 2012-05-15T23:07:34Z http://www.complinet.com/global/news/news/article.html?ref=155302 Member states of the European Union will be allowed to impose stricter capital requirements than those set out in the Capital Requirements Regulation (CRR), under a compromise that member states agreed unanimously today. At the regular meeting of the Economic and Financial Council (Ecofin) in Brussels, member states agreed a common position on the proposed CRD 4 package, which comprises the CRR and a re-cast Capital Requirements Directive (CRD). The "trilogue" negotiations involving the Council, the European Parliament, and the European Commission, can now begin, with the aim of adopting the package, which will implement the Basel III agreement into European law, as early as next month. The draft CRR proposes raising the amount of EU banks' common equity tier 1 (CET 1) from the current 2 per cent of risk-weighted assets to a minimum of 4.5 per cent from 2015. (The requirement will rise in steps: a range of 3.5-4.5 per cent next year and a range of 4.0-4.5 percent in 2014. The total Tue, 15 May 2012 07:30:52 GMT http://www.complinet.com/global/news/news/article.html?ref=155302 2012-05-15T07:30:52Z http://www.complinet.com/global/news/news/article.html?ref=155268 The Financial Services Council (FSC) has backed calls for an inter-governmental agreement between Australia and the U.S. to facilitate the implementation of the Foreign Account Tax Compliance Act (FATCA). John Brogden, chief executive at the FSC, said a partnership similar to the type of arrangement that had been signed by various European countries earlier this year would help overcome many of the legal barriers to compliance with FATCA. The industry had begun discussions with the Australian Treasury to pursue this outcome on behalf of Australia, but recognised that establishing mutual inter-governmental agreements (IGA) would take time to finalise. "The FSC notes that one critical success factor to the IGA is that government's work in concert to deliver consistent data requirements and reporting frameworks, which recognise different legal regimes, operating structures and product offerings," Brogden said. "We propose that once a 'memorandum of understanding' has been reached between Mon, 14 May 2012 23:10:02 GMT http://www.complinet.com/global/news/news/article.html?ref=155268 2012-05-14T23:10:02Z http://www.complinet.com/global/news/news/article.html?ref=155270 Fund managers will find it harder to give themselves big bonus rises during bull markets under rules proposed by the government, a leading superannuation group says. About half the cost of managing the nation's $1.3 trillion in super funds arises from payments to fund managers, with the industry on track to make $9.4 billion in revenue this year. A key complaint of investors has been that managers' performance fees can appear to be "win-win" — that bonuses rise in line with the sharemarket but when markets fall, salary packages are renegotiated to include a larger portion of fixed pay. The Australian Institute of Superannuation Trustees says the practice faces a crackdown when new criteria for performance fees are introduced with MySuper, a no-frills super product beginning in July next year. Draft MySuper legislation suggests fund managers may be forced to repay bonuses from previous years when they underperform the market. Bonuses would have to be based on longer periods of Mon, 14 May 2012 23:02:40 GMT http://www.complinet.com/global/news/news/article.html?ref=155270 2012-05-14T23:02:40Z http://www.complinet.com/global/news/news/article.html?ref=155237 The Australian Prudential Regulation Authority's executive remuneration requirements for banks and insurance companies continue to remain an important element of the prudential regulator's supervisory agenda, said John Laker, chairman. The executive remuneration requirements were not "set and forget", he said. "This is a new area of work for supervisory agencies and we have been building up our expertise and our understanding of remuneration arrangements in the search for better practice. APRA's supervisors have been monitoring progress on implementation, conducting peer comparisons for a number of selected institutions and, more recently, have met with a number of board remuneration committees for more detailed review," Laker told the American Chamber of Commerce in Australia. APRA's prudential practice guide on executive remuneration (PDF), came into effect in April 2010, as a set of extensions to APRA's governance standards. Drawing on lessons from the global financial crisis, Mon, 14 May 2012 02:10:35 GMT http://www.complinet.com/global/news/news/article.html?ref=155237 2012-05-14T02:10:35Z http://www.complinet.com/global/news/news/article.html?ref=155219 LONDON/NEW YORK - JPMorgan will move to limit the fallout from a shock trading loss that could reach $3 billion or more by parting company with three top executives involved in its costly failed hedging strategy, sources close to the matter said. The bank - the biggest in the United States by assets - is expected to accept the resignation this week of Ina Drew, its New York-based chief investment officer and one of its highest-paid executives, in the next few days, the sources said. Two of Drew's subordinates who were involved with the trades, London-based Achilles Macris and Javier Martin-Artajo, are also expected to be asked to leave, they said. Neither was available for comment on Monday. The departures come after the unit Drew runs, known as the Chief Investment Office (CIO), mismanaged a portfolio of derivatives tied to the creditworthiness of bonds, according to bank executives. The portfolio included layers of instruments used in hedging that became Sun, 13 May 2012 23:55:53 GMT http://www.complinet.com/global/news/news/article.html?ref=155219 2012-05-13T23:55:53Z http://www.complinet.com/global/news/news/article.html?ref=155227 May 13 (Reuters) - JPMorgan Chase & Co CEO Jamie Dimon said his bank reacted badly to warning flags last month that it had large losses in financial derivatives trading, a $2 billion embarrassment that has given banking regulators new ammunition. In an interview broadcast on Sunday on NBC's "Meet the Press" television program, Dimon said bank executives were "completely wrong" in public statements they made in April after being challenged over the trades in media reports. "We got very defensive. And people started justifying everything we did," Dimon said. "We told you something that was completely wrong a mere four weeks ago." In early April, Bloomberg News and the Wall Street Journal published stories quoting sources in the derivatives markets saying the bank's corporate investment office had made big bets that distorted prices and could be hard for the bank to unwind. Dimon called the stories "a tempest in a teapot" when questioned by analysts in an April 13 conference Sun, 13 May 2012 23:17:43 GMT http://www.complinet.com/global/news/news/article.html?ref=155227 2012-05-13T23:17:43Z http://www.complinet.com/global/news/news/article.html?ref=155229 The bank profit season was dominated by a long-ignored side of bank balance sheets: deposits. And they are critical for a number of reasons. For more conservative investors, savers in general and particularly those approaching retirement, the deposit story is a good one: banks which used to pay between 150 to 50 basis points below the Reserve Bank cash rate for various deposits are now at least matching that rate and, for longer-term deposits, paying up to 150 basis points above. For the banks and politicians, though, the intensifying battle for deposits uses a double-edged sword. More expensive deposits, in an open market, put pressure on margins unless the other side of the balance sheet – loans – are priced up. But if banks do price up loans, particularly standard variable mortgage rates, politicians on both sides have conniptions because borrowers under mortgage pressure tend to be in marginal seats. And that, of course, leads to a new round of bank bashing rather than Sun, 13 May 2012 23:07:19 GMT http://www.complinet.com/global/news/news/article.html?ref=155229 2012-05-13T23:07:19Z