Royal Bank of Scotland Group Plc, Britain’s biggest taxpayer-owned lender, said it expected to pay a fine in the coming months to settle regulators’ probes into allegations the lender tried to manipulate Libor.
Whether the penalty exceeds the record £290 million ($467 million) Barclays Plc paid in June or not, “it will still be a miserable day in RBS history,” Chief Executive Officer Stephen Hester told reporters on a call November 2, as the bank posted third-quarter operating profit that beat analyst estimates.
RBS is one of more than a dozen banks worldwide facing regulatory probes into allegations that they manipulated the London interbank offered rate, the benchmark for more than $300 trillion of securities. The Edinburgh-based lender has fired at least four traders following an internal probe, and last month suspended its head of rates trading for Europe and the Asia-Pacific region, the first senior manager to be put on leave.
Libor is the biggest regulatory obstacle to overshadow Hester’s attempts to overhaul the company, after it received the biggest banking bailout in history in 2008. RBS said November 2 it would set aside a further £400 million to compensate clients wrongly sold loan insurance and derivatives, bringing the total the bank has earmarked to £1.7 billion.
Compliance action
Nomura Holdings Inc, Japan’s largest brokerage, was found by the country’s securities watchdog to have been involved in an insider-trading incident last year.
A Nomura employee tipped off staff from Japan Advisory Ltd, a hedge fund advisory firm, about a share sale it managed for Elpida Memory Inc in 2011, an official from the Securities and Exchange Surveillance Commission said at a news briefing November 2, speaking anonymously in accordance with the agency’s policy. Japan Advisory then traded Elpida shares, the SESC said.
Nomura has been embroiled in four of six cases unveiled this year as authorities crack down on trading based on tips provided by underwriters about clients’ equity offerings. The latest revelations underscore the task Chief Executive Officer Koji Nagai faces in proving to investors that internal controls have been tightened after the scandal cost it investment banking mandates and prompted his predecessor to resign.
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The SESC’s findings were helped by an internal probe conducted by Tokyo-based Nomura, the official said.
“During one of our voluntary investigations we learned of circumstances with a strong possibility of being related to this incident and we reported our findings to the commission,” Nomura said in a statement November 2.
“Nomura has implemented a series of improvement measures and has continued to conduct voluntary inspections and investigations in relation to internal controls for corporate- related information,” the bank said in the statement.
Ex-Head of Anglo Irish Bank Gets Jail Time for Contempt of Court
Bankrupt Irish businessman Sean Quinn, once the country’s richest man, was sentenced to nine weeks in jail by a Dublin court.
Judge Elizabeth Dunne made the ruling in Dublin Nov. 2 after a contempt-of-court hearing related to efforts to move some of his family’s property beyond the grasp of Irish Bank Resolution Corp., formerly known as Anglo Irish Bank Corp. Quinn began serving his sentence while pursuing an appeal in the Supreme Court, his lawyer Eugene Grant said.
“It is not disputed that significant assets worth millions of euros have been put beyond the reach of the bank,” the judge said Nov. 2. Moving the assets is “nothing short of outrageous -- it is a serious contempt of court.”
Quinn gave his backing to efforts of placing assets outside the reach of nationalized IBRC, Dunne said, a matter for which she found him, his son, who is also named Sean, and his nephew Peter Darragh Quinn in contempt in June. Based on the evidence, Dunne said she had no choice but to sentence the elder Quinn to prison, even after taking his charitable work and medical condition into account.
The former cement-to-insurance empire tycoon was declared bankrupt in January, two months after a court ruled Quinn owed IBRC 2.16 billion euros ($2.78 billion). Quinn was worth about $6 billion in 2008, according to Forbes magazine.
Quinn said he wanted to “get on” with his prison term before being taken into custody.
“I did stupid things,” Quinn told reporters, saying that IBRC “took my companies, my reputation and they put me in jail.”Ex-Polly Peck CEO Ordered to Pay $8 Million for Theft Conviction
Asil Nadir, the former Polly Peck International Plc chief executive officer, was ordered to pay 5 million pounds ($8 million) to compensate victims after he was found guilty of stealing from the company.
Nadir, who built Polly Peck from a textile company in London’s East End to a FTSE 100 firm, must pay within two years or he will face another 72 months in prison, Judge Timothy Holroyde ruled Nov. 2, according to David Jones, a spokesman for the Serious Fraud Office, which prosecuted the case.
Nadir fled the U.K. in 1993 for Northern Cyprus to avoid trial after the company collapsed and returned 17 years later to face the charges. He was found guilty by a London jury in August of stealing nearly 29 million pounds from the company and sentenced to 10 years in prison.
Nadir’s lawyer, Giles Bark-Jones, didn’t immediately respond to a call seeking comment about last week’s ruling.
Orthofix Will Pay U.S. $30 Million to Settle Kickbacks
Orthofix International NV, (OFIX) a maker of spinal implants, agreed to pay the U.S. $30 million to settle claims that a subsidiary paid illegal kickbacks and provided prostitutes to doctors in return for orders.
The subsidiary, Blackstone Medical Inc., paid kickbacks to spinal surgeons in the form of phony consulting and royalty agreements and travel and entertainment, the U.S. Justice Department said in a statement Nov. 2.
The allegations in this case arose from a whistle-blower lawsuit filed under the False Claims Act. Susan Hutcheson, the whistle-blower, will get $8 million out of the settlement, according to the statement.
The settlement’s approval comes after Orthofix officials agreed to pay $42 million to resolve a separate whistle-blower suit and a criminal probe of allegations it paid kickbacks to doctors who used its bone-growth stimulators.
“I am very pleased with the final resolution of this matter,” Robert Vaters, the chief executive of Orthofix, said in a statement. “Orthofix has made a significant improvement to its compliance practices.”
The case is U.S. ex rel Hutcheson and Brown v. Blackstone Medical Inc. and Orthofix International NV, 06-11771, U.S. District Court, District of Massachusetts (Boston). Compliance Policy Volcker Rule Splits Regional U.S. Banks From Wall Street Agenda
Midsized banks that mostly let Wall Street and small firms speak for the industry during the debate over the Dodd-Frank Act have decided it’s time to carve out their own agenda in Washington.
Companies including U.S. Bancorp (USB), SunTrust Banks Inc. (STI), PNC Financial Services Group Inc. (PNC) and Regions Financial Corp. (RF) are opening their own lobbying shops and staffing them with seasoned Washington hands. Regulators and lawmakers have begun to pay attention as the banks argue for changes in how they’re affected by Dodd-Frank rules including the so-called Volcker ban on proprietary trading and procedures for unwinding failed banks.
Executives and lobbyists for regional banks say they should be treated differently by agencies implementing the new regulations, because they focus on traditional deposits and lending rather than the higher-risk activities of firms such as JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc. (GS)
“We are not Wall Street banks but we face the same regulatory regime as a Wall Street bank,” said Mark Oesterle, a lobbyist for SunTrust who formerly served as an aide to Senator Richard Shelby of Alabama, the top Republican on the Senate Banking Committee.
Regional banks tend to have more than $50 billion in assets, mostly in commercial and retail loans rather than complex investment banking products. Their size is well short of a Wells Fargo & Co. (WFC), which is 20 times larger with assets of more than $1 trillion. Most have a distinct geographical footprint, like Regions in the South. There are about a dozen such firms in the U.S. who have become active in Washington.