Federal Reserve regulators had raised concerns with Goldman Sachs that deals that it helped put together for a Malaysian government investment fund, 1Malaysia Development Berhad ( 1MDB), could have put the firm’s reputation at risk, The Wall Street Journal reports, citing people familiar with the matter.
Posts Tagged ‘Corporate Regulation’
Need to Hide Some Income? You Don’t Have to Go to Panama Setting up a shell corporation in the United States is simple – especially in states like Delaware, Wyoming and Nevada.
Obviousl NYT is a constructive, bation-building newspaper like ST.
The files suggest that China is Mossack’s most important market. The firm’s Hong Kong office has been its busiest, and it has outposts in eight other Chinese cities. These nine offices set up 29% of all the firms Mossack had on its books at the end of 2015, according to the ICIJ.
Although there is no evidence of illegality, obeying the law is not the only requirement for Chinese officials. Almost all of those involved are Communist Party members, who must abide by the party’s code of conduct. This bans them from registering or investing in companies abroad. So they may have broken rules, if not the law. High-ranking officials in China can also be held responsible for the business dealings of relatives.
In the u/m story, the journalist implies that the authorities were wrong to investigate Citic for short-selling. Truth is that it’s never a good idea to Run with the hares, and hunt with the hounds”. Got to choose. Most probably senior mgt was clueless about what the sales team selling to ang mohs.
Citic Short-Selling Offer to Hedge Funds Led Police to Its DoorAn initial police investigation of Citic Securities focused on whether the firm was giving foreigners a way to short stocks on the so-called A-shares market in China at the same time that it was engaged in government-sponsored plans to prop up the market, Bloomberg News reports, citing a person familiar with the events.
This case surprised me because all that happened was that a bank account here was usedto buy the shares. Otherwise everything was done overseas.
The Monetary Authority of Singapore (MAS) said in a statement on Wednesday it fined Rajiv, a former Indonesia investment banking head of UBS, S$434,912 (US$313,857) in the 2012 insider trading case. It sweems the guy juz lost his job at Caryle as head of its Indon division.
The MAS said Rajiv bought 1 million PT Bank Danamon shares in March 2012 through his wife’s bank account in Singapore after he possessed price-sensitive and non-public information on a proposed acquisition of Danamon by Singapore’s DBS Bank.
DBS announced the proposed acquisition in April 2012 and MAS said Rajiv made a profit of S$173,965 from his insider trades when he was with UBS. Due to regulatory issues, DBS subsequently pulled the plug on the Danamon deal.
The MAS said Rajiv admitted breaking the securities law and paid MAS the civil penalty without court action.
Documents seen by the FT suggest that the bank continued to seek new business from Iranian and Iran-connected companies after it had committed to stop working with such clients in 2007.
The US authorities are looking into the matter.
Rogue bank strikes again? Think got Temasek as major shareholder can be as yaya papaya as Amos Yee?
Vatican to Comply With U.S. Tax Evasion Law. The Vatican has agreed to comply with Foreign Account Tax Compliance Act, which means banks operating there will have to transmit information on accounts held by American taxpayers to American authorities,
Below is a summary of what Citi and UBS (Harry’s “forever” investments) pleaded guilty to from NYT’s Dealbook
HEAVY FINES FOR FOREIGN EXCHANGE COLLUSION At big banks, foreign exchange trading seemed like the ideal business – relatively low risk for solid revenues. But “what seemed like the perfect business turned out to be the perfect breeding ground for crime,” Michael Corkery and Ben Protess write in DealBook. Citigroup, JPMorgan Chase, Barclays and Royal Bank of Scotland pleaded guilty to a series of federal crimes over a scheme to manipulate the value of the world’s currencies, the Justice Department said Wednesday. A fifth bank, UBS, was also accused of foreign currency manipulation but was not criminally charged because it had alerted the Justice Department to possible misconduct. However, the accusations cost the bank an earlier nonprosecution agreement related to the manipulation of the London Interbank Offered Rate, or Libor.
Prosecutors said traders at the five banks colluded from at least 2007 to 2013. “To carry out the scheme, one trader would typically build a huge position in a currency, then unload it at a crucial moment, hoping to move prices. Traders at the other banks would play along, coordinating their actions in online chat rooms,” Mr. Corkery and Mr. Protess write. The foreign exchange business may have been particularly susceptible to manipulation because it can be less profitable than other forms of trading, which increases the pressure for the traders to look for alternative ways to pad their returns, analysts said. Also, no one government agency is responsible for policing the currency market, creating a regulatory void.
The five banks, which also struck civil settlements with the Federal Reserve, the Commodity Futures Trading Commission, a British regulator and New York’s financial regulator, agreed to pay $5.6 billion in penalties. That is in addition to the $4.25 billion that some of these banks agreed to pay in November to many regulators. Together, the amount nearly equalsthe foreign exchange revenue generated at 10 of the world’s largest banks last year, which was $11.6 billion, according to Coalition, a financial analytics provider.
He notes that guilty pleas from the big banks are “noticeably tougher” than the enforcement actions of the past, when violations drew only deferred or nonprosecution agreements. Yet the act of pleading guilty doesn’t carry the same stigma as it did in the past, Mr. Henning writes, because the government has tried to keep a guilty plea from hindering a bank’s operations. The Justice Department has also been demanding the identities of the employees behind the violations, but it’s unclear whether it will actually prosecute those people. “To change corporate culture and prevent violations from happening in the future, prosecutors may have to go beyond just demanding cooperation and threatening ever larger fines,” Mr. Henning contends.
Shortly before Temasek sold, MM had said that S’pore Inc’s investments in Citi, UBS, and Merill Lynch had a time-frame of 30 yrs. Temasek held its ML investment for over a yr. GIC still owns shares in Citi (profitable), and UBS (big loss). https://atans1.wordpress.com/2011/01/17/mm-got-it-right-temasek-got-it-wrong/
UBS and Citi are still owned by GIC are now big time crooks. Recently, JP Morgan, Barclays, Citigroup and Royal Bank of Scotland – pleaded guilty to criminal charges in the US relating to the rigging of currency markets.
The four, and Switzerland’s UBS, which pleaded guilty to a different charge, agreed to pay $5.7bn (£3.6bn) in fines.
The Hong Kong Monetary Authority says that it “takes a positive attitude should HSBC consider relocating its headquarters back to Hong Kong”, where it is the largest bank.
HSBC WEIGHS MOVE FROM LONDON HSBC was established in Hong Kong 150 years ago and moved its headquarters to London in 1993. Now it is considering a return trip. Citing changes in regulation, HSBC says it will study whether to relocate its headquarters out of London, reports Chad Bray in DealBook.
A big part of the issue is Britain’s bank levy, which was instituted in 2010 to help pay for the government’s financial crisis bailouts. While all banks operating in Britain pay the tax, Mr. Bray writes that “The levy hits British-based banks particularly hard, however, as they are taxed on their global balance sheets.” HSBC’s announcement could become a political issue as Britain nears a general election on May 7.
Hongkong Bank is a HK quitter. It moved to UK in 1993, juz before PRC regained HK in 1997. But all is forgiven.
Both HK have S’pore have similar sized economies (about US$300bn in GDP).
HK is willing to be lender-of-last-resort to HSBC a bank with US$2,6 trillion in assets, despite HSBC being almost 9 times bigger than HK’s GDP.
Yet the S’pore authorities, it’s clear from hints in the FT, are unwilling to have StanChart HQed here (only 1.1 trillion in assets), despite Temasek being the largest single shareholder (which will benefit from reduced tax: HSBC shares were up 6% in HK yesterday), and despite many of StanChart’s operations being run from here.
The PAP administration is afraid of another of Temasek’s investments blowing up? After all StanChart is not as safe as our local banks: https://atans1.wordpress.com/2015/03/25/stanchart-not-as-solid-as-local-banks/
It also has weaker capital ratios than HSBC and the big US banks. So weak that the new CEO is expected to call for yet another massive rights issue.
Remember LKY and his bank investments that are forever? OK 30 yrs leh) Even longer than Buffett’s investments, he once said
In 2007/2008, our SWFs’ bot into UBS (GIC), Citi (GIC) and Merrill Lynch (Temasek) in a big way that ST characterised then as showing S’pore was a tua kee investor.
We lost serious money in two of the 30-yr investments by 2009.
— Estimate of Temasek’s realised losses on ML and Barclays:
— Estimate of GIC’s loss on UBS as at 2011:
(BTW, Temasek’s 2012 purchase of Credit Suisse mandatory bonds:
I waz surprised at the swiftness that SGX allowed Asiasons Capital, Blumont Group and LionGold Corp to resume normal trading, as I had expected a prolonged period under “designated trading”, allowing me time to think about and investigate Asiasons. (My initial tots on Asiasons).
My immediate reaction waz, “Shld have had the balls to buy at 12ish cents*” with cash upfront. My next reaction was “How come SGX come to conclusion everything halal so fast?”. My third tot was, “Wonder if SGX and punters are going to repent?”.
A few days after stocks cheonged following the lifting of trading restrictions, SGX and MAS announced investigations. On 26 October 2013, BT reported JUST as shares of Asiasons Capital, Blumont Group and LionGold Corp shares appeared to be clambering out of their doldrums, news of the Monetary Authority of Singapore’s (MAS) investigation into their trading activities dragged them down again.
“MAS and the Singapore Exchange (SGX) are conducting an extensive review of the activities around these stocks,” MAS said in a statement yesterday. “This episode has also surfaced broader issues regarding the market structure and practices which MAS and SGX intend to review thoroughly.”
All three stocks slid to their lowest level in a week as skittish investors took profit. Asiasons shares fell 18 per cent to 19 cents, Blumont stock dropped 19 per cent to 16 cents and LionGold shed 15 per cent to 25 cents by the close of trading yesterday. The three counters were among the five biggest percentage decliners on the SGX.
Why couldn’t the plans to investigate and the lifting of trading restrictions be announced at the same time? If necessary, the latter could have been delayed a few days, while SGX and MAS deliberated? No wonder MAS MD got only a B rating compared to his M’sian and Pinoy counterparts (A) http://www.tremeritus.com/2013/10/27/head-of-mas-ravi-menon-only-gets-a-b-grade/. Shamefully that S’porean is graded lower than Pinoy or M’sian.
And do remember that FTs hold the top two posts at SGX.
Anyway, I’m not complaining. Gives me time to think about and investigate Asiasons. But lifting the trading restrictions (implying everything halal) and, a few days later, saying that there were going to be investigations, ain’t fair to punters.
SGX has publicly said it wants retail investors in the market. Great way to treat them. But then there were S-Chips. I remember the boast by one Larence Wong of SGX (now departed), in the early noughties, that only chinese companies with accounts certified by int’l auditors were to be listed. They were, but looked what happened? The perils of ang moh tua kee.
*Closed at 0.147 yesterday.
Chinese no hue US laws.
Ned L. Sherwood won a proxy contest with the ChinaCast Education Corporation, an education company based in China that is incorporated in the United States, but the ousted executives subsequently transferred all the company’s valuable Asian assets, leaving Mr. Sherwood and the US public shareholders with nothing but a lawsuit in China. The deal highlighted the risks of investing in Chinese companies.
Now some distressed debt investors get to find out what exactly it is you buy when you buy American-issued debt in a company incorporated in the Cayman Islands and doing business in China. I suspect the answer will be “not much.” http://dealbook.nytimes.com/2013/03/22/chinese-solar-giants-bankruptcy-presents-a-test/?nl=business&emc=edit_dlbkpm_20130322
But investors still buying these bonds. http://blogs.reuters.com/breakingviews/2013/03/22/exposed-bondholders-suffer-solar-burns-in-china/
Savers looking for ways to earn the kind of income once reliably available from traditional investments, will end up buying “unsafe” products.
Let’s hope the authorities are more vigilant now that the FT that was responsible for products like “minibonds” has moved on. What annoys me is that while MAS found that banks like DBS had failed to appreciate the risks to customers, it only slapped them lightly. In the UK, heavy fines are levied and banks are expected to reimburse customers, even sophisticated ones http://www.bbc.co.uk/news/business-21423831.
.”UBS’s conduct fell far short of what its customers deserved”.
FOR SAVERS, RISKY INVESTMENTS TURN SOUR Americans whose stock portfolios lost money in the financial crisis have turned to speculative investments promoted by aggressive financial advisers – leading to steep losses and accusations of fraud. “Those alternative investments have now had time to go sour in big numbers, state and federal securities regulators say, and are making up a majority of complaints and prosecutions,” The New York Times’s Nathaniel Popper reports. “Last Wednesday, Mr. Galvin’s office ordered one of the nation’s largest brokerage firms, LPL Financial, to pay $2.5 million for improperly selling the real estate bundles, known as nontraded REITs, or real estate investment trusts, to hundreds of state residents from 2006 to 2009, in some cases overloading clients’ accounts with them.”
“Brokers promoting bad investments to unsophisticated investors is nothing new. But while the easy prey used to be people looking to get rich quick, the pool has widened to include savers looking for ways to earn the kind of income once reliably available from traditional investments. Regulators are warning investors that the dangers are unlikely to recede, given the Federal Reserve’s pledge to keep interest rates near zero and the push among financial firms to earn more revenue from so-called alternative investments marketed to retail investors.”
So the call for more transparency and disclosure is BS!
Sophisticated investors are supposed to read the documents. We all know that retail investors don’t often take the time to read disclosure, but the securities laws are based on the idea that information is filtered into the markets through disclosure to sophisticated investors who then set the real price of the security … If sophisticated investors can’t be bothered to read the documents and act on them, then we have a real gap in the entire disclosure regime and asset pricing generally.
Unfortunately, this is what the evidence from the C.D.O. market before the financial crisis shows. And because of this, the idea that requiring still more, better or clearer disclosure is likely to be unfruitful in many cases … Until we better understand how sophisticated investors process and read disclosure, regulators should be wary of trying to solve the problem by simply requiring more disclosure.
Chief Justice Chan Sek Keong’s recent acquittal of two former board members of Airocean Group should make it harder to prosecute independent directors of Singapore-listed companies.
He made it clear that companies may not have to disclose information because it is trade (business not market, I assume) sensitive: the information has to be likely to significantly move the share price as well. And directors in most instances should not be expected to question professional advice that they receive with respect to how they discharge their duties.
Independent directors were scared after a district judge convicted former Airocean independent directors Peter Madhavan and Ong Seow Yong on charges related to disclosure lapses from 2005 relating to the corruption investigation of ex-Airocean chief executive Thomas Tay.
Another nail in the coffin of our regime of disclosure. If can suka-suka no need to dislose WTF! I prefer DJ’s reasoning. Hope AG “appeals”.
S-Chip after S-Chip shows that corporate governance didn’t work. Yet independent directors never ever were held accoutable except in one case: directors there were slapped lightly on the cheek by SGX. WTF!
Meanwhile some combination of a massive fine (say US$1.5bn), mgt changes (both looking unlikely as is the loss of US licence) or Temasek doesn’t want to be on the wrong side of the allegations and wants out (unlikely too), someone like JP Morgan or BoA who covets StanChart’s trade financing biz in Asia and other emerging markets might bid http://www.breakingviews.com/standard-chartered-selloff-has-gone-far-enough/21034299.article
Anyway it is cheap. Trading at about 1.17x book (HSBC trades at 1x book) even after its recovery. It usually trades usually at 1.3x book.
Hurry, hurry before the discount disappears. Buying at this level gives exposure to S’pore and HK where banks trade at around 1.3x book), and Msia and Indonesia (where banks trade at around 2x book minimum) at a discount.
Hong Kong, where the securities regulator in May proposed introducing civil liability for banks working on initial share sale prospectuses (we got this here but kinda useless deterrent: look at the S- Chips that were listed), is thinking of allowing class-action lawsuits to help investors seek damages.
The city’s Law Reform Commission in late May recommended legislation to allow a group with a common complaint to sue through a representative. Initially, the class actions should only be for cases such as product liability and consumer fraud, which can be financed by an existing public fund.
Hong Kong currently allows multiparty proceedings under rules that the city’s then-chief justice Andrew Li criticised as restrictive and inadequate in 2004. Losing parties must pay all or part of their opponent’s legal fees under Hong Kong law, a deterrent for individual investors seeking damages. S’pore has shumething similar though our CJ never ever criticised the law on multiparty suits.
The inability to bring class action suits and the issue of costs hindered the mini-bonders, and other similar structured product investors from pursuing their claims here. Some DBS HN5 holders failed in very their technical law-suit. Some Pinnacle note investors are suing Morgan Stanley in the US.
Chart shows that the authorities are pricing S’pore out of fees to themselves, and to the accountants, lawyers etc based here by making S’pore more expensive than HK when it comes to charging cos fees to set-up and maintain here. HK is the leading Asian centre for registrating and maintaining offshore companies outside of the “Sunny places for shady people” to misquote Somerset Maugham.
And S’pore non-executive directors are well paid and do less work vis-a-vis our neighbours.
Non-executive directors (NEDs) in Singapore got the second-highest pay when compared with directors in Malaysia, Indonesia and Thailand, a report by Hay Group showed yesterday. Those in Indonesia were better than S’porean NEDs.
But boards in Singapore also meet the least often, and hold the least number of committee meetings compared with their regional peers.
The management consultancy analysed data collected from 200 large companies in the four countries from 2008 to 2010.
The results showed that at the median level, NEDs from large companies in Singapore were paid US$75,300 in 2010, second to those in Indonesia, who took home US$178,600.
By comparison, NEDs in Thailand and Malaysia received US$46,600 and US$46,300 respectively.
In Indonesia, NEDs take home a substantially higher pay because state-owned companies and some private companies stipulate their pay to NEDs as a percentage of the president-director’s compensation for both the salary and bonus portions. These which are supposedly linked to performance – already made up about four-fifths of NEDs’ pay.
Most of the remuneration for NEDs in Singapore, Thailand and Malaysia is made up of a flat fee, not performance-linked.
The salary of NEDs in the region have been heading higher over the past few years.
In Singapore, the increase was 9% in both 2009 and 2010, while in Malaysia, the NED pay rose 17% in 2009 and 3% in 2010.
In Indonesia, the increase was% 13% and 10% respectively in 2009 and 2010. In Thailand, the NED pay rose 14% in both years.
Thai companies held the most number of board meetings between 2008 and 2010, on a median level. In 2010, an average of nine board meetings were called by the 48 Thai companies reviewed.
Singapore fared the worst, with the 50 companies calling just five board meetings each in 2010. Malaysia’s top companies held six meetings, while those in Indonesia conducted seven.
Indonesian companies also had their audit committees meet more than 10 times a year between 2008 and 2010, which is significantly more often than in Singapore – at four times a year – and Malaysia, at five times a year.
As audit committees have a heavier responsibility than other committees, in Singapore, the chairman and members of the audit committee get higher annual retainers than those in other committees. Thai cos also do something similar
The median tenure of independent directors is the highest in Singapore, which stands at seven years. Malaysia follows with six years, Indonesia is at four-and-a-half years and Thailand has a median tenure of three years.
Proposed revisions to Singapore’s Code of Corporate Governance note that companies must explain the reasons that a director who has served more than nine years on the board is still deemed independent.
Hay Group’s review showed that 62% of the top companies in Singapore have at least one independent director who has served more than nine years on their board.
The 180 Chinese companies that went public around the world since the beginning of 2010 are trading at an average of 21% below their IPO prices, Bloomberg News reports.
In Singapore, the third-biggest market for such listings after Hong Kong and New York, eight Chinese companies that went public in 2010 have declined an average of 47 percent from their offer prices, the data show. That compares with a drop of 15 percent for the 23 non-Chinese firms that had IPOs in 2010.
And trading volumes are shrinking. In the last 12 months, trading volumes in S-Chips have halved. [Update on 24 April 2012 at 7.20pm]
But HK and the US are doing something. Regulators in Hong Kong are set to propose rules that would make banks liable for faulty IPO documents, Reuters reports. And earlier today, Hong Kong’s securities regulator fined a brokerage firm and revoked its corporate finance licence. Mega Capital (Asia) has been fined HK$42m (US$5.4mfor “inadequate and sub-standard” diligence work and “failure to act independently”. The firm was the sole adviser to Hontex International, which had raised HK$1bn via a share sale in 2009. BBC Online
In the US, the SEC and FBI have been investigating people allegedly involved in fraud in China-based companies listed on US exchanges. Latest [25 April 2012] SEC investigations and analysis of the complicated structure that overseas listed Chinese cos (including S-Chips) have to adopt to list overseas which makes malpractice easier..
Err waz happening here? We are told by an SGX non-executive director that SGX is “a private club” despite it regulatory role. He said this recently when representing SGX in court as SGX’s lawyer in a case involving a S–Chip. Article 14 analyses the case.
It may be a tiny Chinese educational company worth a little over $200 million. But the ChinaCast Education Corporation has found itself embroiled in a battle worthy of a John Grisham novel.
Its ousted chief executive, Ron Chan, has been accused of aiding in the disappearance of ChinaCast’s chops — ornate corporate seals that are needed to approve everything from paychecks to contracts.
And recently more than a dozen men claiming an association with Mr. Chan burst into the company’s Shanghai office twice, violently carting off several computers from the finance department, according to a United States regulatory filing.
No wonder S-chips are finding it difficult to get people to be non-executive or independent directors. And the row between China Sky’s former independent director Yeap Wai Kong and SGX doesn’t help. He took SGX to court in an attempt to quash its public reprimand issued against him in December 2011. The court is hearing the case.