The long read - Libor scandal: the bankers who fixed the world’s most important number

With arrogant disregard for the rules, traders colluded for years to rig Libor, the banks’ lending rate. But after the crash, the regulators were on their trail. read more »

Samsung bribery case may bring legal heat in US

Experts say scandal falls under Foreign Corrupt Practices Act

The bribery scandal swirling around Samsung Electronics Vice Chairman Lee Jae-yong is expected to reach beyond South Korea's judiciary, with analysts saying the technology giant and its de facto leader could be subject to a U.S. anti-corruption law.

The allegations leveled against the 48-year-old heir are likely to fall under America's Foreign Corrupt Practices Act, experts say. The law bans making payments to foreign government officials in an effort to obtain or retain business. read more 

Deutsche Bank slashes bonuses for senior executives following £5.8bn legal settlement

Chief executive John Cryan has cancelled bonuses for top-level executives and slashed them for senior staff

Deutsche Bank scrapped the bonuses of its top executives for a second straight year and slashed them for other senior employees, as Germany’s largest lender tries to shore up capital that’s been eroded by low interest rates and legal expenses.

The measures, announced in a memo to employees on Wednesday that was signed by the members of the management board, will affect about a quarter of employees, including vice presidents, directors and managing directors. A “limited number” of employees in crucial positions will receive a special long-term incentive, partly in stock, that will be deferred for as long as six years, according to the memo. read more »

General Motors Charged With Accounting Control Failures

The Securities and Exchange Commission today announced that General Motors has agreed to pay a $1 million penalty to settle charges that deficient internal accounting controls prevented the company from properly assessing the potential impact on its financial statements of a defective ignition switch found in some vehicles.

According to the SEC’s order, when loss contingencies such as a potential vehicle recall arise, accounting guidance requires companies like General Motors to assess the likelihood of whether the potential recall will occur, and provide an estimate of the associated loss or range of loss or otherwise provide a statement that such an estimate cannot be made.  The SEC’s order finds that the company’s internal investigation involving the defective ignition switch wasn’t brought to the attention of its accountants until November 2013 even though other General Motors personnel understood in the spring of 2012 that there was a safety issue at hand.  Therefore, during at least an 18-month period, accountants at General Motors did not properly evaluate the likelihood of a recall occurring or the potential losses resulting from a recall of cars with the defective ignition switch. read more »

Tax cheats beware, whistleblowers are telling the IRS

Taxpayers who have information about people or businesses that cheat on their taxes are increasingly acting as whistleblowers and turning them into the IRS.

According to an IRS report, its Whistleblower Office issued 418 whistleblower awards during fiscal 2016 compared with just 99 in 2015 (however, the dollar amount of those payouts fell from 2015’s $101.3 million to 2016’s $61 million). All told, whistleblowers have helped the IRS collect more than $3.4 billion over the past decade that would have otherwise been lost to fraud, and they’ve won more than $465 million in rewards over that period. read more »

Rolls-Royce Bribery Occurred Since 1989, Execs Knew in 2010

Bribery at Rolls-Royce Holdings PLC dated back to 1989, involved a dozen countries and former company leadership knew about the issue in 2010 but failed to notify authorities, according to documents released by prosecutors, and a judge’s ruling, that were part of a global anti-corruption settlement. read more »

Download Rolls Royce bribery judgement 

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Did Rolls-Royce get off lightly over 'truly vast' bribery?

ines that will pretty much wipe out a year’s profits. A grovelling public apology from the chief executive. Immeasurable damage to the reputation of what is one of Britain’s most prestigious companies.

It might seem like a just punishment for Rolls-Royce after it admitted what judge Sir Brian Leveson called “truly vast, endemic” bribery and corruption that ran for decades at the world-famous engineering business.

But it could have been so much worse. In fact, many will wonder if Rolls has got actually off lightly read more »

U.S. regulator can sue banks over mortgage bond sales -appeals court

A U.S. appeals court on Wednesday revived a lawsuit by the Federal Deposit Insurance Corp against five banks including Credit Suisse Group AG stemming from the sales of mortgage-backed securities ahead of the 2008 financial crisis.

The 2nd U.S. Circuit Court of Appeals in New York ruled that a lower-court judge had erred in dismissing the FDIC lawsuit, which also named units of HSBC Holdings Plc, Royal Bank of Scotland Group Plc, UBS AG and Deutsche Bank AG as defendants. read more »

Medical Device Company Charged With Accounting Failures and FCPA Violations

The Securities and Exchange Commission today announced that Texas-based medical device company Orthofix International has agreed to admit wrongdoing and pay more than $14 million to settle charges that it improperly booked revenue in certain instances and made improper payments to doctors at government-owned hospitals in Brazil in order to increase sales.

Four then-executives at Orthofix also agreed to pay penalties to settle cases related to the accounting failures, which according to the SEC’s order involved Orthofix improperly recording certain revenue as soon as a product was shipped despite contingencies requiring certain events to occur in order to receive payment in the transaction.  In other instances, Orthofix immediately recorded revenue when it had provided customers with significant extensions of time to make payments.  The accounting failures caused the company to materially misstate certain financial statements from at least 2011 to the first quarter of 2013.

“Orthofix’s accounting failures were widespread and significant, causing Orthofix to make false statements to the public about its financial condition,” said Antonia Chion, Associate Director in the SEC’s Enforcement Division.

The SEC’s order further finds that Orthofix violated the Foreign Corrupt Practices Act (FCPA) when its subsidiary in Brazil schemed to use high discounts and make improper payments through third-party commercial representatives and distributors to induce doctors under government employment to use Orthofix’s products.  Fake invoices were used for purported services. read more »

Ex-Traders in Singapore Guilty of Cheating Deutsche Bank, HSBC

Two former currency traders from Deutsche Bank AG and HSBC Holdings Plc were convicted of cheating the banks by making false trades.

Former HSBC senior dealer Ivan Chng and ex-Deutsche Bank trader Toh Hway Khuan pleaded guilty in separate hearings in Singapore’s High Court on Wednesday. The men both admitted to using their banks’ accounts in 2009 to get preferential rates on the dollar. The cases are unrelated and the men will be sentenced at a later date. read more »

JPMorgan agrees to $55 mil settle of mortgage discrimination complaint

JPMorgan Chase & Co has agreed to pay $55 million to settle a U.S. Justice Department lawsuit accusing it of discriminating against minority borrowers by allowing mortgage brokers to charge them more for home loans, a person familiar with the matter said on Wednesday.

The U.S. Justice Department complaint, filed in Manhattan federal court on Wednesday, accused the bank of willfully violating the U.S. Fair Housing Act and the Equal Credit Opportunity Act between 2006 and 2009 and showing "reckless disregard" for the rights of at least 53,000 African-American and Hispanic borrowers. read more »

Ex-GC Takes Bio-Rad to Trial, Claims He Was Fired for Reporting FCPA Breaches

For more than two decades, Sanford "Sandy" Wadler was the top lawyer at Bio-Rad Laboratories Inc.

Over the next few weeks, he'll be the company's courtroom adversary.

Any trial pitting an in-house lawyer against his chief client has a voyeuristic quality to it. Wadler's case, a rare whistleblower suit to proceed to trial, will provide a multiweek dissection of internal decisions around a key area of corporate compliance. The dispute has already sparked arguments over attorney-client privilege and is likely to feature testimony from Wadler and Bio-Rad's outside counsel at Steptoe & Johnson LLP. No matter how it ends, the trial is apt to air dirty laundry for Bio-Rad's legal department as it goes over in detail the company's response to allegations of foreign bribery and corrupt dealings.

SEC Charges Businessman With Misusing EB-5 Investments

The Securities and Exchange Commission today announced fraud charges against an Oakland, Calif.-based businessman accused of misusing money he raised from investors through the EB-5 immigrant investor program intended to create or preserve jobs for U.S. workers.

The SEC alleges that Thomas M. Henderson and his company San Francisco Regional Center LLC falsely claimed to foreign investors that their $500,000 investments would help create at least 10 jobs within several distinct EB-5 related businesses he created, including a nursing facility, call centers, and a dairy operation.  This would qualify the investors for a potential path to permanent U.S. residency through the EB-5 program. read more »

Bankers Get Another Ulcer-Inducing Worry

And you thought it was tough being an investment banker in Hong Kong with equity deals half what they were in 2015. The city's securities regulator just added some more pressure to that already uncomfortable position.The Securities and Futures Commission has filed a lawsuit against Standard Chartered Plc, UBS Group AG and KPMG LLP over China Forestry Holdings Co.'s 2009 initial public offering. It's seeking unspecified damages for minority shareholders related to alleged market misconduct read more »

https://www.sec.gov/news/pressrelease/2017-16.html

Allergan Paying $15 Million Penalty for Disclosure Failures During Merger Talks

The Securities and Exchange Commission today announced that Allergan Inc. has agreed to admit securities law violations and pay a $15 million penalty for disclosure failures in the wake of a hostile takeover bid.

The SEC’s order finds that Allergan failed to disclose in a timely manner its negotiations with potentially friendlier merger partners in the months following a tender offer from Valeant Pharmaceuticals International and co-bidders in June 2014.  Allergan publicly stated in a disclosure filing that the Valeant bid was inadequate and it was not engaging in negotiations that could result in a merger.  It was required to amend the filing if a material change occurred.  According to the SEC’s order, Allergan never publicly disclosed material negotiations it entered with a different company that would have made it more difficult for Valeant to acquire a larger combined entity.  And after those negotiations failed, the investing public wasn’t informed that Allergan entered into merger talks with Actavis, the company that ultimately acquired Allergan, until the announcement that a merger agreement had been executed read more »

Why Dodd-Frank Has Little to Fear From Constitutional Challenges

One of the ways that businesses have fought back against greater financial regulation since the financial crisis has been to claim that the new oversight threatens the bedrock principle of separation of powers.

These arguments have earned some sympathy from the federal judiciary. Courts in Denver and Washington have recently declared some aspects of the 2010 Dodd-Frank Act to be unconstitutional on separation of powers grounds.

But these declarations have been almost entirely empty of content. The courts have fallen over themselves to assure everyone that the unconstitutional agency powers should continue to be exercised almost exactly as before. read more »