Bribery mea culpas can make firms look like chumps 6 Nov 2013 U.S. prosecutors offer leniency for voluntary disclosure of payoffs abroad. Diebold, Ralph Lauren and others got hefty penalties instead. The bait and switch erodes watchdog credibility and the law. Companies may stop cooperating absent legitimate carrots and a lot less stick.
Infosys visa woes stress need for Outsourcing 2.0 5 Nov 2013 A $34 mln fine for “paperwork errors” in the Indian company’s U.S. visa applications will sting. But given the woeful state of America’s job market, the outsourcing industry needs to brace itself for tougher immigration rules. Reprogramming the business would be a good start.
UK’s new investor safeguards strike right balance 5 Nov 2013 Independent investors in London-listed stocks are getting new rights. These will mean the relationships between companies and controlling shareholders are policed more carefully. This should prevent governance debacles, without giving minority investors too much power.
Avon can’t dress up ugly foreign bribery case 31 Oct 2013 A rift with the SEC over corruption charges coupled with poor results erased over $2 bln of the cosmetic giant’s market value. Balking at a government offer isn’t unusual, but doing so in public breaks new ground. Avon and others may be fed up with the regulatory zeal on FCPA.
FX probe shows risks of benchmarks 30 Oct 2013 Watchdogs delving into foreign-exchange trading may find nothing, but like Libor, FX is open to abuse. Traders can profit from pushing benchmarks away from the real market price. They supposedly offer certainty and lower costs, but they need tough regulation.
Chances of big banking going boring sped by Fed 25 Oct 2013 The central bank and other U.S. watchdogs want American lenders’ liquidity buffers to be safer and in place more quickly than international rules demand. This is likely to hit banks’ bottom lines and dissuade others from bulking up. It’s a smart way to foster financial stability.
HK anti-foreigner property tax hits wrong target 25 Oct 2013 It’s a year since Hong Kong whacked a 15 percent levy on non-resident buyers. Luxury apartment values are subdued and speculators have moved on. But smaller flats are still getting more expensive. Only higher interest rates and increased supply will reverse the trend.
U.S. bank living wills now mostly bail-in prep 22 Oct 2013 Having financial firms arrange their own funeral was a key goal for dealing with dying banks. But regulators’ need for them has faded as bondholder bail-ins now seem more likely than wind-downs. Living wills can, at least, help watchdogs stay up to speed on market complexity.
Big U.S. bank fines far more art than science 22 Oct 2013 In theory there are defined, if loose, legal criteria for penalties. But the largest, like the possible $13 bln bite out of JPMorgan, can seem pulled from thin air. While courts occasionally run the rule over the numbers, regulators’ zeal and public outrage outweigh the logic.
Take M&A out of the financial crisis toolkit now 21 Oct 2013 JPMorgan and BofA are paying billions in settlements related to failed deals that were actively encouraged by regulators. The “supervisory acquisition” was a trusty instrument for decades. Not anymore, though. Watchdogs better hope their other new mechanisms work as planned.
Cathay-Qantas spat to clear cloudy Hong Kong skies 11 Oct 2013 The city’s dominant carrier is challenging its Australian rival’s plan to set up a local budget operator. The dispute hinges on the vague definition of airline ownership in Hong Kong’s constitution. Greater legal clarity could freeze Qantas out, or spark a competitive scramble.
Obama’s Fed chair pick looks timed to calm market 9 Oct 2013 Appointing Janet Yellen to run the central bank is a safe, boring end to a wild nomination process. But a little certainty is what global investors need from a politically chaotic US. A debt ceiling deal remains elusive, but at least there’s some predictability on Fed policy.
Hugo Dixon: Bundesbank right to focus on doom loop 7 Oct 2013 Bundesbank President Jens Weidmann has criticised rules which encourage euro zone banks to load up on their own governments’ debts. The ECB will have the power to end this bad practice when it becomes the industry’s regulator. But how to do this without triggering a new crisis?
Climate change tail risks aren’t like Wall Street’s 27 Sep 2013 Like bank risk managers, researchers rely on complex models to assess worst-case scenarios. The incentives are different, though. Dire predictions can be more rewarding for scientists. That’s the reason to focus on the IPCC’s new baseline forecasts, which are now less alarming.
Helium fiasco deflates case for strategic reserves 27 Sep 2013 The U.S. government stockpiled the gas for a fleet of blimps that never flew. Now it’s dumping supplies at cut-rate prices, creating market distortions and shortages. A legislative fix is in the works, but it’s a reminder that hoarding resources can be a volatile strategy.
Fresh U.S. mortgage bailout raises timely red flag 26 Sep 2013 Fannie and Freddie are on the mend, but the Federal Housing Administration may need extra Treasury support. New U.S. capital for an agency that backstops home loans would coincide with the re-emergence of private guarantors. It’s a helpful reminder to remember past mistakes.
ICAP’s Libor lesson: client service has limits 25 Sep 2013 The interdealer broker has been fined $87 mln, and three ex-employees have been charged for aiding Libor-rigging at banks. Going too far to help clients can be a problem in all areas of finance. But the regulators’ reports depict an industry that was especially susceptible.
Sports betting case may draw ace at top U.S. court 18 Sep 2013 A New Jersey law allowing gambling on the Super Bowl and the like was blocked in a lower U.S. court. But one judge countered that the ruling undermines state constitutional rights. That’s a rare, high-stakes issue that could tempt the Supremes. The Garden State needn’t fold yet.
JPMorgan pays price for embarrassing regulators 17 Sep 2013 The bank is close to a $700 mln Whale-trade deal. It’s the rancid cherry on the cake CEO Jamie Dimon baked with shareholders’ flour and eggs, making watchdogs look stupid after years of chiding them. It’s unlikely to cost him his job. But it’s a good lesson in hubris management.
Barclays’ Qatari penalty makes rebranding harder 16 Sep 2013 The bank has been fined 50 mln stg by the UK regulator for making 322 mln stg of undisclosed payments connected with its 2008 capital raising. Barclays is contesting the fine and the sum is not huge. But it’s hard to reinvent the brand when the reputational blows keep coming.