A NOTEPAD ON COMPANY AND FINANCIAL LAW, NEWS AND REGULATION
From the SFO’s press release today:
“Further to our announcement on 2 July 2012, the Director of the Serious Fraud Office, David Green QC, is satisfied that existing criminal offences are capable of covering conduct in relation to the alleged manipulation of Libor and related interest rates. The investigation, announced on 6 July, involves a number of financial institutions.”
See also: Serious Fraud Office to open criminal investigation into alleged LIBOR manipulation
A straw to cling to…Article 3 of the Regulation (EU) No 651/2012 on the issuance of Euro coins published today:
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The Parliamentary Commission on Banking Standards, established as the LIBOR scandal started to unfurl, yesterday issued its call for evidence, inviting responses by 24 August 2012 to the following initial questions:
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The six individuals found guilty earlier this week of insider dealing under the Criminal Justice Act 1993 have received prison sentences ranging from three and half years to eighteen months, totalling 16 years in aggregate.
What’s this on page 64 of Barclays interim results today?
“The FSA has commenced an investigation involving Barclays and four current and former senior employees, including Chris Lucas, Group Finance Director. The FSA is investigating the sufficiency of disclosure in relation to fees payable under certain commercial agreements and whether these may have related to Barclays capital raisings in June and November 2008.
Barclays considers that it satisfied its disclosure obligations and confirms that it will cooperate fully with the FSA’s investigation.”
Those were of course the capital raisings from Middle East investors that enabled Barclays to avoid having to take an explicit Government bailout.
“The Commission today [26 July 2012] launched an in-depth consultation on issues arising in the area of investment funds. The consultation focuses on:
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The Commission has today published amendments to its October 2011 “Proposals for a Regulation on Market Abuse and for a Directive on Criminal Sanctions for Market Abuse” (which we discussed in this post). The amendments would criminalise the manipulation of benchmarks, including LIBOR and EURIBOR and all other benchmarks which “determine the amount payable under a financial instrument”.
The Commission’s press release is here, the EU Justice Commission’s press release is here and a set of FAQs is here.
The Commission proposes to achieve this criminalisation of benchmark manipulation through amendments to its draft Directive on Criminal Sanctions for Market Abuse:
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Lord Turner, chairman of the Financial Services Authority, gave a speech today at Bloomberg on “Banking at the cross-roads: where do we go from here?”. The speech can be read here.
Observing that:
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Anthony Salz, former senior partner of Freshfields, has been appointed to lead a review of Barclays business practices (the Review). The Barclays press release announcing the Review is here and the Review’s terms of reference are here.
The Review was initiated following Barclays fine for the attempted manipulation of the LIBOR. The terms of reference assert that:
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After a four and a half month trial, six individuals have been found guilty of insider dealing under the Criminal Justice Act 1993. They used price-sensitive information from the printers to UBS and JP Morgan Cazenove to place spread bets ahead of public announcements by companies including Reuters, Biffa and Premier Oil, and were convicted of making a combined profit of £732,044.59 between May 2006 and May 2008.
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David Gauke, Exchequer Secretary to the Treasury, this morning used a speech at Policy Exchange to announce a consultation on:
“proposals to crack down further on those that seek to push abusive tax avoidance schemes and make it easier for taxpayers to identify such schemes when they are on the end of a hard sell by a dodgy promoter”.
On what avoidance is
The Exchequer gave the following examples:
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The final report of “The Kay Rcview of UK Equity Markets and Long-term Decision Making” has been published today. The final report is here and the associated BIS press release is here. Professor Kay’s speech – with its emphasis that those engaged in the equity investment chain should operate to fiduciary standards – launching the report is here.
Professor Kay was asked by the Business Secretary in June 2011 to review whether the UK equity markets give sufficient support to “their core purpose of enhancing the performance of UK companies and providing returns to savers”. His answer is a pretty resounding “no”:
“…we conclude that short-termism is a problem in UK equity markets, and that the principal causes are the decline of trust and the misalignment of incentives throughout the equity investment chain”.
The report sets out principles “designed to provide a foundation for a long-term perspective in UK equity markets and describe the directions in which regulatory policy and market practice should move”, and then specific recommendations aimed at “providing the first steps towards the re-establishment of equity markets that work well for their users”.
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Lloyds Banking Group today announced the non-binding heads of terms that it has agreed with the Co-operative Group for the sale of 632 branches, 4.2 million customer accounts (and not “customers”, as the Lloyds release has it – even a bank can’t sell people) and a £24 billion balance sheet (the “Verde” divestment).
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The cab firm Addison Lee has committed to a “babies at work” scheme, the first UK company to do so. How Addison Lee decided on its scheme was featured earlier this week in two fascinating documentaries on BBC2 (stiill on iPlayer).
Here’s what the Daily Telegraph made of it. Here’s what happened when the Evening Standard tried it – described by the (female) editor as “hopeless as an idea”.
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A great graphic from Credit Season, via Business Insider. (Click on graphic to enlarge.)
So the City of London is described in an exhibition currently running at The Walbrook Building in the City.
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TheCityUK lobby group, whose mandate is:
“is to promote the competitiveness of UK financial services – to make the UK the best place in the world to establish and grow a financial services business and, in turn, to maximise the sector’s contribution to the UK”
has a new Chairman. Gerry Grimstone of Standard Life will success former Clifford Chance lawyer Stuart Popham in October 2012.
See also: Promoting the UK Legal Services Sector: Government Plan for Growth
The Commission was established as the LIBOR scandal started; its membership and mandate were announced yesterday evening. It is to consider and report on:
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From the WSJ Law Blog:
“…firms looking to maximize the use of space in their pricey digs are doing things that in past decades would have been unthinkable. As in:
- Shrinking lawyer offices
- Giving all lawyers the same-sized office (gasp) regardless of seniority
- Moving some offices away from the windows and into the building core (where secretaries and file cabinets used to sit).”
See also: “There are now far more capable lawyers and law firms than there is work for them to do”
This note discusses developments since the European Commission’s autumn 2011 proposal for a financial transaction tax, and this note looks at the historical background to the “Tobin tax”.
See also: French trading tax lacks details, say banks – Financial Times
The Financial Services Authority, in its guise as the UK Listing Authority, has published the second issue of its “Primary Market Bulletin”.
The PMB has replaced the UKLA’s “List!” publication in providing guidance to Main Market issuers and their advisers on the application of the Prospectus, Listing, and Disclosure and Transparency Rules.
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From Sky News:
“By Mark Kleinman, City Editor
US regulators have criticised the British response to the escalating international Libor-rigging scandal, labelling it another example of a “made-in-London” financial crisis.
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The Securities and Exchange Commission’s 13 July 2012 ”Work Plan for the Consideration of Incorporating International Financial Reporting Standards into the Financial Reporting System for U.S. Issuers” is here.
The Financial Reporting Council’s response expresses its disappointment at the SEC’s decision:
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Not news, but a good explainer from the New York Times:
“They are supposed to be among Wall Street’s most closely guarded secrets: changes in research analysts’ views, up or down, of a company’s prospects. But some of the nation’s biggest brokerage firms appear to be giving a handful of top hedge funds an early peek at these sentiments — allowing them to trade on the information before other investors get the word.
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The Financial Services Authority has fined Jay Rutland, formerly a broker at Pacific Continental Securities (UK) Limited, £30,000 and banned him from from performing any function in relation to any regulated activity. The fine was reduced from £160,000 on the grounds that it would cause Mr Rutland serious financual hardship.
From the FSA’s Final Notice for Mr Rutland:
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Press release here and FAQs here.
See also: Short selling and CDS regulation adopted, will apply from 1 November 2012
The Bank of England has this morning detailed how its “Funding for Lending” scheme, “designed to boost lending to the real economy”, will work. If only it really was as easy as the Treasury suggests:
UPDATE 1 August 2012: Funding for lending scheme opens for business – HM Treasury
The Foreign and Commonwealth Office has today launched a “review of the balance of competences of the EU as it affects the United Kingdom”. From William Hague’s statement to Parliament today:
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The Dutch company ASML on 9 July 2012 announced a co-investment programme in which three of its biggest customers are being invited to part fund ASML’s R&D programme, and to take minority investments in its equity .
ASML may issue up to 25% of its equity to those customers in return for cash. The proceeds of that cash issuance will be returned to ASML shareholders (excluding the investing partners) via a “synthetic buy-back”.
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Via the Treasury Select Committtee, here is the Chairman of the Financial Services Authority’s 10 April 2012 letter to the Chairman of Barclays, in which the FSA remarked on its:
“…concerns about the cumulative impression created by a pattern of behaviour over the last few years, in which Barclays often seems to be seeking advantage through the use of complex structures, or through arguing for regulatory approaches which are at the aggressive end of intepretation of the relevant rules and regulations”.
Barclays’ response – which reads like that a boy who, whilst clever, is missing the wider point that his headmaster is making – is here.
See also: The implicit subsidy of UK banks by the government – Bank of England paper, May 2012
A stimulating interview with Nigel Savage, Chief Executive of the College of Law, in Legal Week, including this comment on Scottish law schools in the 1970s:
“Savage also valued Scotland’s approach to education. “The country had exceptional law schools that were taught by practitioners, rather than pure academics. They knew what they were talking about and had the experience to back it up,” he says.”
Which will not be everyone’s experience of the modern-day College of Law.
See also: College of Law bought by owner of waste management firm
The CEO designate of the future Financial Conduct Authority, Martin Wheatley, set out his vision for the new conduct regulator in a speech last week at the FSA’s Enforcement Conference:
In September 2011 the European Securities and Markets Authority opened an investigation into “empty voting”, which it described as:
“The separation of the economic interest relating to shares from their voting interest (decoupling of voting rights), usually achieved by using derivative instruments and trading strategies in the securities markets…(i.e. having voting rights attached to shares without corresponding economic exposure).”
On 29 June 2012 ESMA released a Feedback Statement summarising responses received to its investigation. Based on its analysis of the responses, ESMA has decided that there is no basis for any regulatory action in relation to empty voting. From page 12 of the Feedback Statement:
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Following the European Parliament’s approval of the European Market Infrastructure Regulation on 29 March 2012, the Council of the EU adopted the EMIR on 4 July 2012. The final text of the EMIR is here.
The EMIR, more formally the “Regulation on OTC derivatives, central counterparties and trade repositories”, will apply from the end of 2012. The European Securities and Markets Authority now has to prepare the technical standards required to support the EMIR. Steven Maijoor (the Chair of ESMA) stated in this speech on 4 July 2012 that it plans to submit those technical standards to the European Commission on 30 September 2012. ESMA’s 25 June 2012 consultation on those technical standards is here.
UPDATE 27 July 2012: The text of the EMIR has been published in the Official Journal and so will come into force in 20 days time. For key dates on its implementation thereafter, see this Herbert Smith note.
UPDATE 10 August 2012: ESMA has published the responses received to its June 2012 technical standards consultation.
See also: What is the EMIR?
The European Securities and Markets Authority published on 2 July 2012 the fifteenth updated version of its “Question and Answers on Prospectuses“. The purpose of the Q&As is to “promote common supervisory approaches and practices in the application of the PD [the Prospectus Directive] and its implementing measures. It does this by providing responses to questions posed by the general public and competent authorities in relation to the practical application of the PD”.
In an undated announcement on its website, the Serious Fraud Office states that it has re-opened its investigation into Weavering Capital UK, the advisor to the US$639 million Weavering Macro Fixed Income Fund Ltd hedge fund which collapsed in 2008:
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