http://www.complinet.com/ Compliance Complete North America RSS feed en THOMSON REUTERS GRC en THOMSON REUTERS GRC http://www.complinet.com/global/news/news/article.html?ref=151988 WASHINGTON (Reuters) - As pro-business groups clamor to convince regulators to overhaul their draft of the controversial Volcker rule, fault lines are emerging within the opposition over just what a revamped draft should look like. The Volcker rule -- named for former Federal Reserve Chairman Paul Volcker -- was mandated by the 2010 Dodd-Frank financial oversight law to prevent banks that receive government backstops like deposit insurance from making risky trades with their own funds. Heralded by the left as a means to rein in the risk-taking that nearly toppled the financial system in 2007-2009, the Volcker rule has been excoriated by the right, who warn it could take liquidity out of the market and make it hard for firms to raise capital. The rule -- whose first draft was proposed by regulators in October -- would have the biggest impact on large banks such as Goldman Sachs and Morgan Stanley. But as business groups, banks and others rush to complete Fri, 03 Feb 2012 07:52:05 GMT http://www.complinet.com/global/news/news/article.html?ref=151988 2012-02-03T07:52:05Z http://www.complinet.com/global/news/news/article.html?ref=151968 Despite a new federal crackdown announced this week aimed at combating tax refund fraud involving the use of stolen identities, current law enforcement efforts are not enough and fraudsters are still pumping massive sums of tax fraud proceeds through U.S. banks, sources told Thomson Reuters. "IRS and Justice should have been doing this three years ago. This widespread criminal activity is more profitable than drug dealing," said regulatory consultant and investigator Jim Dowling, a former Internal Revenue Service criminal investigator special agent who also acted as an anti-money laundering (AML) advisor to the Office of National Drug Control Policy. The Internal Revenue Service this week said that in late January it worked with the Justice Department's Tax Division and U.S. Attorneys' offices across the country to target more than 100 people in 23 states suspected of involvement in the theft of thousands of identities and taxpayer refunds. The resulting indictments, arrests and Fri, 03 Feb 2012 07:50:00 GMT http://www.complinet.com/global/news/news/article.html?ref=151968 2012-02-03T07:50:00Z http://www.complinet.com/global/news/news/article.html?ref=151990 WASHINGTON (Reuters) - MF Global's former chief risk officer told Congress on Thursday that he tried to warn the firm's leadership that it was on an unsustainable path, but was ousted for his efforts. Michael Roseman, who was edged out in January 2011 from the now-bankrupt futures brokerage, said he rang alarm bells internally about the firm's exposure to European sovereign debt a year before the firm collapsed in late October of 2011. "My views on risk certainly played a factor in that decision," Roseman told a House Financial Services investigative subcommittee, about why he was asked to leave the firm. Thursday's hearing focused on MF Global's outsized risk appetite and whether insiders and credit rating agencies did enough to curb it, or at least flag it to investors. Before MF Global's collapse, then Chief Executive Jon Corzine pushed the firm to take on a more aggressive trading strategy, including a $6.3 billion dollar bet on European debt, executed Fri, 03 Feb 2012 07:47:04 GMT http://www.complinet.com/global/news/news/article.html?ref=151990 2012-02-03T07:47:04Z http://www.complinet.com/global/news/news/article.html?ref=151987 ZURICH - Switzerland is investigating 12 U.S., European and Japanese banks suspected of conspiring to manipulate interbank lending rates used to set interest rates on hundreds of trillions of dollars of securities. The Swiss Competition Commission (COMCO) said on Friday it had received information of possible collusion between derivatives traders concerning London Interbank Offered Rate (LIBOR) and Tokyo Interbank Offered Rate (TIBOR). "Derivative traders working for a number of financial institutions might have manipulated these submissions by coordinating their behaviour, thereby influencing these reference rates in their favour," COMCO said in a statement. Libor is derived from the rates that banks say they charge each other and is used worldwide as a benchmark for setting rates on about $350 trillion of derivatives and other financial products. Small changes in the rate can have large impacts on the amounts of interest that can be charged. It is also Fri, 03 Feb 2012 07:46:03 GMT http://www.complinet.com/global/news/news/article.html?ref=151987 2012-02-03T07:46:03Z http://www.complinet.com/global/news/news/article.html?ref=151989 (Reuters) - Charles Schwab Corp will reimburse customers for arbitration fees in cases they file against the brokerage while a California federal court sorts out a legal dispute related to a regulatory action involving the company, Schwab's chief executive said. "We have a fundamental disagreement" with the Financial Industry Regulatory Authority, chief executive Walt Bettinger said during a winter business update for institutional investors and analysts. The company and its regulator are at odds, he said, over the interpretation of a Supreme Court case concerning class-action lawsuits and whether it takes precedence over FINRA rules. FINRA, Wall Street's self-watchdog, filed a complaint against San Francisco-based Schwab on Wednesday accusing the online brokerage of requiring customers to waive their rights to pursue class actions against the firm, a violation of industry rules. Schwab also required customers to agree that industry arbitrators would not have Fri, 03 Feb 2012 07:42:28 GMT http://www.complinet.com/global/news/news/article.html?ref=151989 2012-02-03T07:42:28Z http://www.complinet.com/global/news/news/article.html?ref=151991 WASHINGTON (Reuters) - The U.S. Senate on Thursday approved new curbs aimed at preventing lawmakers from trading shares based on inside information, but also extended the bill's disclosure requirements to more than 300,000 other federal employees. The Senate voted 96-3 to pass the Stop Trading on Congressional Knowledge (STOCK) Act, which would require members of Congress to file electronic disclosures of their stock trades within 30 days of the transactions. As a rare piece of legislation with strong bipartisan support in a deeply divided Congress - and the promise of a quick signature by President Barack Obama - the measure was quickly laden with more than 20 amendments this week. Senators who saw the "clean government bill" as a vehicle bound for quick passage sought to attach proposals ranging from a ban on executive bonuses at Fannie Mae and Freddie Mac to a limit on terms for members of Congress. Similar legislation is pending in the Republican-led Fri, 03 Feb 2012 07:41:39 GMT http://www.complinet.com/global/news/news/article.html?ref=151991 2012-02-03T07:41:39Z http://www.complinet.com/global/news/news/article.html?ref=151985 The Investment Industry Regulatory Organization of Canada is implementing single-stock circuit breakers as part of its efforts to prevent a repeat of the May 6 flash crash which saw the TSX plunge by several hundred points. The "circuit breakers" will allow exchanges to pause trading on a security if its price moves by 10 percen or more within a 5-minute period. IIROC is hoping the circuit breakers will prevent a run on liquidity when there is short term volatility in stock prices. During the flash crash, a number of electronic traders withdrew from Canadian exchanges in response to a plunge in US markets. "Single-stock circuit breakers will be an important tool to help mitigate volatility in the trading of individual stocks,” said Susan Wolburgh Jenah, IIROC’s president and chief executive officer. "Together with other complementary IIROC initiatives, this tool is an important ingredient in building investor confidence and enhancing market integrity." The circuit breakers Fri, 03 Feb 2012 07:41:00 GMT http://www.complinet.com/global/news/news/article.html?ref=151985 2012-02-03T07:41:00Z http://www.complinet.com/global/news/news/article.html?ref=151972 Banking regulators should be careful not to impose compliance burdens that could cut off credit, Timothy Geithner, U.S. Treasury Secretary, told reporters Thursday. "It is important that bank supervisors, in the normal conduct of bank exams and supervision, as well as in the design of new rules to limit risk taking and abuse, are careful not to overdo it with actions that cause undue damage to the availability of credit or liquidity to markets," Geithner said. Pointing to an ease in bank lending, Geithner said commercial and industrial loans are up by an annual rate of more than 10 percent over the past six months. Geithner also announced that the White House will release more details of its plan to replace Fannie Mae and Freddie Mac this spring. "Our plan will wind down the government-sponsored enterprises and bring private capital back into the market, reducing the government's direct role in the housing market and better targeting our support towards first-time homebuyers Fri, 03 Feb 2012 07:40:00 GMT http://www.complinet.com/global/news/news/article.html?ref=151972 2012-02-03T07:40:00Z http://www.complinet.com/global/news/news/article.html?ref=151973 WASHINGTON, (Reuters) - Banking transactions with Iran and financing for its oil shipments could come under tougher scrutiny after a bipartisan sanctions bill easily passed a key U.S. Senate Committee on Thursday. The Senate Banking Committee passed a bill that lawmakers hope will further eat into revenues they say Tehran is using to develop nuclear weapons. Iran denies seeking nuclear arms. The impact of new sanctions will depend on how aggressively the administration chooses to implement them. President Barack Obama on Dec. 31 signed sanctions aimed at Iran's central bank, and his administration is grappling with how quickly to put them into action. The White House said on Thursday that enforcement of the sanctions should not harm U.S. allies or oil markets. The new Senate package seeks to target foreign banks that handle transactions for Iran's national oil and tanker companies, and for the first time, extends the reach of Iran-related sanctions Fri, 03 Feb 2012 07:35:35 GMT http://www.complinet.com/global/news/news/article.html?ref=151973 2012-02-03T07:35:35Z http://www.complinet.com/global/news/news/article.html?ref=151992 CHICAGO (Reuters) - U.S. farmers and ranchers, still tending raw wounds from the bankruptcy of brokerage giant M.F. Global, said a $100 million plan by the Chicago Mercantile Exchange to protect them against similar fiascos amounted to "window dressing." M.F. Global, the once-dominant broker for hedging in agriculture futures, went bust on Oct. 31 after making bad bets on European debt. Thousands of clients have yet to get back about 30 percent of their money, which was supposed to be held in segregated accounts. Investigators are trying to track down about $1.2 billion in missing customer funds. The CME insurance plan, to be effective from March 1, covers farmers and ranchers who use the exchange for up to $25,000 and cooperatives for up to $100,000 when a clearing member fails. The move was seen as an effort to lure back customers or sooth their anger after the exchange, MF Global's main regulator, was criticised for inadequate oversight. The CME, the world's Fri, 03 Feb 2012 07:35:04 GMT http://www.complinet.com/global/news/news/article.html?ref=151992 2012-02-03T07:35:04Z http://www.complinet.com/global/news/news/article.html?ref=151974 (Reuters) - The United States indicted Wegelin, the oldest Swiss private bank, on charges that it enabled wealthy Americans to evade taxes on at least $1.2 billion hidden in offshore bank accounts, the U.S. Justice Department said on Thursday. The announcement, by federal prosecutors in Manhattan, represents the first time an overseas bank has been indicted by the United States for enabling tax fraud by U.S. taxpayers. The indictment said the U.S. government had seized more than $16 million from Wegelin's correspondent bank, the Swiss giant UBS AG, in Stamford, Connecticut, via a separate civil forfeiture complaint. Because Wegelin has no branches outside Switzerland, it used correspondent banking services, a standard industry practice, to handle money for U.S.-based clients. UBS could not be reached for immediate comment. The charges against Wegelin, of fraud and conspiracy, provide a rare glimpse into the world of Swiss private banking in the wake of a crackdown on UBS AG. Thu, 02 Feb 2012 14:57:44 GMT http://www.complinet.com/global/news/news/article.html?ref=151974 2012-02-02T14:57:44Z http://www.complinet.com/global/news/news/article.html?ref=151923 WASHINGTON, (Reuters) - The head of the Commodity Futures Trading Commission has ordered an extensive review of how futures brokerages are regulated, following the collapse of MF Global three months ago, a CFTC official told Reuters on Wednesday. CFTC Chairman Gary Gensler ordered the review after questions emerged about whether the CFTC or exchange-operator CME Group, whose self-regulatory arm served as MF Global's front-line regulator, could have done more to prevent the firm's collapse and safeguard customer money. MF Global had nearly a half dozen regulators policing various parts of the firm, but no single regulator was responsible for the whole company. Gensler has directed the agency's Division of Swap Dealer and Intermediary Oversight to find ways to bolster agency regulations for how it oversees and what it requires from self-regulatory organizations and futures commission merchants such as MF Global, the official told Reuters. The review includes Thu, 02 Feb 2012 07:52:00 GMT http://www.complinet.com/global/news/news/article.html?ref=151923 2012-02-02T07:52:00Z http://www.complinet.com/global/news/news/article.html?ref=151920 NEW YORK (Reuters) - In a rare criminal prosecution to emerge from the financial crisis, two former Credit Suisse traders admitted on Wednesday to conspiring to manipulate the value of about $3 billion in subprime mortgage-backed securities in order to hide losses as the U.S. real estate market began to collapse in 2007. The men, London-based David Higgs, 42, and Salmaan Siddiqui, 36, of McLean, Virginia, pleaded guilty in U.S. district court in New York to a criminal charge of conspiracy to falsify books and records and commit wire fraud. Their one-time boss, Kareem Serageldin, 38, a U.S. citizen who lives in Britain, faces the same conspiracy charge and additional charges of falsifying books and records and wire fraud. Federal prosecutors said they do not consider Serageldin a fugitive even though he has yet to appear in the United States to answer to the charges. There have been few prosecutions of individuals at high-profile banks for conduct that contributed to the Thu, 02 Feb 2012 07:48:32 GMT http://www.complinet.com/global/news/news/article.html?ref=151920 2012-02-02T07:48:32Z http://www.complinet.com/global/news/news/article.html?ref=151928 The nation's two principal banking trade groups and the three federal banking "safety and soundness" regulators sparred Wednesday over a House bill designed to reduce examination burdens. The bipartisan bill seeks to address industry complaints that regulators' exams have been too strict and have placed undue pressure for loan-write downs. The bil would require regulators to give financial institutions more timely examination reports, set new standards for regulators to evaluate commercial loans, create an interagency exam ombudsman and establish an independent, expedited appeals process. The bill, HR 3461, the Financial Institutions Examination Fairness and Reform Act, was co-sponsored by Rep. Shelly Moore Capito of West Virginia, the Republican chairman of the Financial Services Committee's financial institutions and consumer credit subcommittee, and by the ranking Democratic member, Carolyn Maloney of New York. Witnesses for the American Bankers Association and the Independent Thu, 02 Feb 2012 07:45:00 GMT http://www.complinet.com/global/news/news/article.html?ref=151928 2012-02-02T07:45:00Z http://www.complinet.com/global/news/news/article.html?ref=151926 (Reuters) - A proposed settlement to resolve mortgage abuses by top U.S. banks will give states broad authority to punish firms that mistreat borrowers in the future, according to documents seen by Reuters on Wednesday. Under the settlement, which states are currently reviewing to decide whether they will join, the states and a separate "monitoring committee" will have the authority to go to court to enforce the terms and seek penalties of up to $5 million per violation. A strong enforcement mechanism could help the states and the Obama administration sell the deal to the public, after left-leaning activist groups have questioned whether the negotiations were too lenient on the banks. Negotiations between state and federal officials to resolve allegations of misconduct in servicing home loans have stretched into their second year. The delay is partly due to some states trying to extract a bigger settlement from the banks and to reserve their ability to file Thu, 02 Feb 2012 07:44:37 GMT http://www.complinet.com/global/news/news/article.html?ref=151926 2012-02-02T07:44:37Z http://www.complinet.com/global/news/news/article.html?ref=151924 NEW YORK, (Reuters) - Wall Street regulator FINRA on Wednesday filed a complaint against Charles Schwab Corp accusing the online brokerage of requiring customers to waive their rights to pursue class actions against the firm, a violation of FINRA rules. The San Francisco brokerage in October added a new provision to more than 6.8 million customer account agreements that would preclude them from starting or joining class-action lawsuits against the firm, the Financial Industry Regulatory Authority said in its complaint. Schwab also required customers to agree that industry arbitrators would not have the authority to consolidate claims from multiple parties, which would in essence create a class-action or grouping of claims. These provisions violate FINRA rules on the conditions that firms may impose on customers. "This is fantastic to see. Brokerage firms are trying to eviscerate the protections afforded to retail investors," said plaintiff's lawyer Andrew Thu, 02 Feb 2012 07:44:30 GMT http://www.complinet.com/global/news/news/article.html?ref=151924 2012-02-02T07:44:30Z http://www.complinet.com/global/news/news/article.html?ref=151929 WASHINGTON (Reuters) - An advisory committee urged U.S. securities regulators on Wednesday to relax outdated rules that trigger public financial reporting for companies, but it stopped short of backing a new capital-raising strategy known as "crowdfunding." In a public meeting, members of the Advisory Committee on Small and Emerging Companies voted on two proposed regulatory changes for the Securities and Exchange Commission to consider that would help private companies raise capital. However, they raised concerns with crowdfunding, a new capital-raising strategy that lets investors take small stakes in private start-ups over the Internet, even though the idea has received some support from President Barack Obama and Congress. The panel said it needed more time to study the issue to ensure it does not lead to investment scams. "This is just an opportunity for fraud in the extreme," said committee co-chair Stephen Graham, who advises on securities offerings Thu, 02 Feb 2012 07:40:56 GMT http://www.complinet.com/global/news/news/article.html?ref=151929 2012-02-02T07:40:56Z http://www.complinet.com/global/news/news/article.html?ref=151925 NEW YORK (Reuters) - The U.S Labor Department has removed a controversial part of its proposed 401(k) fee disclosure rule that would have required retirement plan providers to create a summary document, or "roadmap," of all their fees for employers. The proposed rule called for retirement plan providers to create a table of contents for fees. It was not clear if the document had to be in print or electronic form, or how often it had to be updated. The idea of a fee roadmap is not going away, though. In coming days, the department is expected to issue its final fee disclosure rules. They will require all providers that work with 401(k) plans, such as Fidelity Investments and Vanguard Group, to disclose what employers pay for retirement plan administration, money management and other services. The Labor Department said it plans to issue a separate proposal in June requiring retirement plan providers to offer a summary document, according to the agency's regulatory Thu, 02 Feb 2012 07:35:50 GMT http://www.complinet.com/global/news/news/article.html?ref=151925 2012-02-02T07:35:50Z http://www.complinet.com/global/news/news/article.html?ref=151916 A federal jury in Miami has convicted the principal of a Costa Rican brokerage firm and a Las Vegas stock promoter on securities fraud and other charges for their roles in a stock manipulation scheme. Jonathan Curshen, the principal of Red Sea Management and Sentry Global Securities, Costa Rica-based companies that provided offshore accounts and facilitated trading in penny stocks, was found guilty of conspiring to commit securities fraud and launder the proceeds. Nathan Montgomery, a Las Vegas stock promoter, was convicted of conspiring to commit securities fraud and wire fraud. Curshen, 47, who divided his time between San Jose, Costa Rica and Sarasota, Florida, and Montgomery, 30, manipulated the stock price of a company called CO2 Tech (CTTD), which traded on the Pink Sheets, according to documents filed in U.S. District Court for the Southern District of Florida. Three other stock promoters -- Robert Weidenbaum, Timothy Barham Jr., Ryan Reynolds -- previously pleaded Thu, 02 Feb 2012 07:30:12 GMT http://www.complinet.com/global/news/news/article.html?ref=151916 2012-02-02T07:30:12Z http://www.complinet.com/global/news/news/article.html?ref=151937 As the economy suffers from low rates and high unemployment, state securities regulators are warning investors to beware of fraudsters promising high-return investments. Seniors investors who are keen to move away from low-yield fixed-income products to alternative investments are at risk of being lured into the arms of fraudsters selling investments with spectacular returns, said Jack Herstein, president of the North American Securities Administrators Association and assistant director of Nebraska's Department of Banking and Finance Bureau of Securities. "Don't chase the offer of high yield or returns into a dead-end investment," Herstein said in a circular released by NASAA yesterday. NASAA's warning comes after the Federal Reserve said last week that it would keep its benchmark interest rate low through to the end of 2014. The trade group says state and provincial regulators are concerned that fixed income investors may be tempted into high yield securities without understanding Thu, 02 Feb 2012 07:30:00 GMT http://www.complinet.com/global/news/news/article.html?ref=151937 2012-02-02T07:30:00Z http://www.complinet.com/global/news/news/article.html?ref=151954 Feb 1 (Reuters) - A final report into fraud allegations at Sino-Forest Corp left many questions unanswered, with scant new detail on the value of its timber holdings or its opaque ties with suppliers. The report by an internal committee, released late on Tuesday, is unlikely to pacify investors, who have been clamoring for answers since June, when short-seller Carson Block and his Muddy Waters firm likened the Canadian-listed Sino-Forest to a "ponzi scheme" and accused it of inflating the size of its Chinese forestry assets. Regulators and law enforcement officials are investigating the company, which denies the allegations. Sino-Forest said in November that preliminary evidence from its internal probe had found no evidence of fraud. In its final report, the committee admitted it has failed to answer all the questions on the company's business practices in China, including ones about related-party transactions and the valuation of its forestry holdings. "I don't Thu, 02 Feb 2012 03:57:44 GMT http://www.complinet.com/global/news/news/article.html?ref=151954 2012-02-02T03:57:44Z http://www.complinet.com/global/news/news/article.html?ref=151885 U.S. investigating authorities have traced more than 90 percent of the customer money whichdisappeared from futures brokerage MF Global around the time of its bankruptcy, the New York Times reported, citing people briefed on the investigation. The report came as a member of the Commodity Futures Trading Commission, the regulator leading the investigation, voiced impatience with the pace of implementing new protections for customers and urged the commission to take early steps to increase public confidence, such as conducting spot checks on the treatment of customer accounts. The CFTC has traced nearly all the missing money to banks, MF Global's trading partners and the firm's securities customers, the Times report said. The Commission, however, is unsure whether the money can be retrieved, the paper said.  "We understand the frustration of customers, but the CFTC must take the necessary time -- however long it takes -- to get to the bottom of what happened at MF Global and take appropriate actions," Wed, 01 Feb 2012 07:51:00 GMT http://www.complinet.com/global/news/news/article.html?ref=151885 2012-02-01T07:51:00Z http://www.complinet.com/global/news/news/article.html?ref=151887 U.S. authorities are preparing to charge four former Credit Suisse Group AG employees with criminal and civil fraud related to write-downs on subprime mortgage derivatives at the height of the financial crisis, sources familiar with the matter said.        Credit Suisse will not be charged in the matter, which is being investigated by federal prosecutors and the U.S. Securities and Exchange Commission, the sources said.   The four people to be charged were former Credit Suisse traders who were fired, another source said, but it was unclear when and for what reason. The suspected illegal conduct took place roughly four years ago, the source said, adding that the bank had been cooperating with officials.     The investigation stems from $2.85 billion in write-downs that Credit Suisse took on collateralized debt obligations in 2008, said the sources, who spoke on the condition of anonymity. Credit Suisse revealed those CDO losses in early 2008, and blamed them on a group of rogue Wed, 01 Feb 2012 07:49:03 GMT http://www.complinet.com/global/news/news/article.html?ref=151887 2012-02-01T07:49:03Z http://www.complinet.com/global/news/news/article.html?ref=151861 A federal banking regulator concerned about an increase in the number of relationships between banks and payment processors that serve third-party merchants, some of which pose substantial money laundering and other risks, on Tuesday issued guidance to remind banks of their obligations to engage in related due diligence and monitoring. Some experts say the guidance, issued by the Federal Deposit Insurance Corporation (FDIC), did not come as a surprise. "The regulators have been focused on, and increasingly concerned about, the relationship that banks have with payment processors, particularly where they're providing the gateway to the banking system for these entities that may or may not have undertaken the same level of customer due diligence and monitoring activities as the bank would in a direct relationship with the customers of payment processors," Carol Van Cleef, a partner with the Washington, DC law firm Patton Boggs LLP, told Thomson Reuters. The guidance states that the Wed, 01 Feb 2012 07:45:00 GMT http://www.complinet.com/global/news/news/article.html?ref=151861 2012-02-01T07:45:00Z http://www.complinet.com/global/news/news/article.html?ref=151870 Mobile banking will be one of the Senate Banking Committee's priorities for 2012, committee chairman Tim Johnson, Democrat of South Dakota, said Tuesday. Johnson said the committee will hold a hearing on the topic at a yet-to-be determined date this year, but did not disclose any particular problems or potential legislative fixes. If legislative action is taken on mobile banking, NACHA, the Electronic Payments Association, wants it drafted in ways that do not discourage innovation, Scott Lang, the group's senior vice president of association services, told Thomson Reuters. "In addition, we would hope that any deliberations to identify areas that may or may not warrant legislative action take into account areas in which private sector rule-making already exists and works well," Lang added. There is an appetite for broad cybersecurity legislation that could touch on mobile banking, said Paul Smocer, president of BITS, the technology policy division of the Financial Services Roundtable.Smocer Wed, 01 Feb 2012 07:44:00 GMT http://www.complinet.com/global/news/news/article.html?ref=151870 2012-02-01T07:44:00Z