Compliance Comes to Capitol Hill

President Obama signed into law a bill tightening insider-trading rules on members of Capitol Hill and other government officials prohibiting them from profiting on material nonpublic information they gain access to during their employment. The new legislation referred to as the STOCK Act, the Stop on Congressional Knowledge Act.  The Act prohibits lawmakers, their families and staff, as well as other executive and judicial branch employees … [Read more...]

EU Approved Clearing Rules for OTC Derivatives

To protect financial markets, EU approved legislation that would force trading of some over-the-counter derivatives through clearinghouses. The legislation consists of set of rules that allows European Union regulators to decide on types of derivatives that should be centrally cleared.     The law also sets rules on transparency, management of clearinghouses, including capital reserves they must hold to protect themselves from … [Read more...]

High-Frequency Traders May Face EU Fees

Under European Union plan to limit market abuse, high-frequency traders and similar investors may be required to pay penalty fees when they create market volatility by placing excessive numbers of canceled orders. The introduced fees would be similar to the fee structure introduced last year on Nasdaq OMX Group Inc. (NDAQ) exchanges in Nordic countries. The plan addresses May 2010 “flash crash” during which the Dow Jones Industrial … [Read more...]

Bank of America Settle Mortgage Securities Action for $315 Million

Bank of America Corp. reached a $315 million settlement with a group of investors who sued its Merrill Lynch unit claiming they were misled about mortgage- backed securities. According to a court filing, holders of the asset-backed certificates sued Merrill Lynch in December 2008 claiming false and misleading prospectus statements related to the securities. The investors argued that inaccurate statements were made about qualifications of … [Read more...]

SEC Suspended Employees and Cut Pay for Oversight Related to Madoff

The U.S. Securities and Exchange Commission (SEC) disciplined eight employees for agency’s oversight related to Bernard Madoff’s Ponzi scheme.    The punishments are ranging from suspensions to written reprimands. The sanctions were based on Inspector General H. David Kotz’s 2009 report on the agency’s dealings with Madoff.   According to the report, the SEC could have uncovered the Ponzi scheme well before Madoff confessed in … [Read more...]

MF Global Bondholders May Get as Little as 10%

According to Fitch Ratings, MF Global Holdings Ltd.’s bondholders may recover as little as 10 cents on the dollar in the company’s bankruptcy recently filed. Owners of the failed broker’s senior unsecured debt will get back between 10% and 30% of the notes’ face value.    The analysis is based on MF Global’s balance sheet as reported in public filings and doesn’t consider the potential performance of the broker’s European … [Read more...]

Basel III Hurts European Companies More Than U.S.

According to Standard & Poor’s, under new capital rules for banks and insurers European companies will pay as much as 50 billion euros ($68 billion) a year in additional borrowing costs.   It is more than triple the amount for U.S. borrowers. S&P’s chief credit officer for Europe, Blaise Ganguin, wrote in a report stating that higher funding costs, shortened loan maturities and a lower equity investor base may push up the cost of … [Read more...]

CFTC to Face Senate Scrutiny Over Speculation Curbs

According to various news sources, on October 6th, the CFTC will face Senate inquiry hearing about the trading curbs. The hearing will be led by Senator Carl Levin at the Permanent Subcommittee on Investigation. The CFTC and SEC leading U.S. efforts to write new derivatives rules for the $601 trillion global swaps market after largely unregulated trades helped fuel the 2008 credit crisis. The rules will govern trades conducted by Goldman Sachs … [Read more...]

Derivatives Data May Quadruple After Dodd-Frank Act

According to recent study conducted by TABB group, new data-recording requirements under Dodd-Frank may increase derivatives data levels by as much as 400%. The information to be stored in Swap Data Repositories includes data on electronic trading, clearing, and reporting.   As the result, record-keeping requirements will make the day of an OTC derivatives trader infinitely more complicated. … [Read more...]