Bloomberg News

EU Market Rules, Logitech Probe, Finra Fines: Compliance

May 23, 2014

Europe’s capital markets are getting a new foundation.

The 28-nation European Union’s top markets regulator yesterday made public more than 800 pages of proposed rules that cover everything from high-frequency trading curbs to transparency requirements for bond markets and position limits for commodity derivatives, with the aim of boosting confidence in the financial system.

The EU’s bid to revamp its market legislation, known as the Markets in Financial Instruments Directive, or MiFID, is the centerpiece of its work to implement agreements reached by the Group of 20 nations after the turmoil that followed the 2008 collapse of Lehman Brothers Holdings Inc.

Members of the European Parliament and national governments reached a deal on the plans in January.

The accord ended more than two years of haggling. It’s now the European Securities and Markets Authority’s responsibility to define terms and flesh out detailed rules for national authorities to implement.

The legislation is set to take effect in 2016, with longer time frames for some measures.

Compliance Action

Logitech Drops as SEC Probes Mouse Maker’s Financial Statements

Logitech International SA (LOGN) dropped as much as 6.1 percent after the Swiss maker of computer mice said the U.S. Securities and Exchange Commission is investigating its financial statements.

The company is delaying the filing of its annual report for the year through March beyond the deadline of May 30, Lausanne-based Logitech said in a statement released May 21.

The company said its audit committee is investigating a number of accounting matters, which could result in adjustments to its past year’s results. Some of the issues under review are also subject of a formal SEC probe, in which it’s cooperating. That includes a revision to financial statements concerning warranty accruals and amortization of intangible assets, as well as transactions from 2007 to 2009 with a distributor the company didn’t identify, Logitech said.

Nancy Morrison, a spokeswoman for Logitech, declined to provide further details on the investigations.

Finra Fines JPMorgan, Morgan Stanley for Errant Bond Reports

The Financial Industry Regulatory Authority fined JPMorgan Chase & Co. (JPM:US) $95,000 for bond reporting violations, according to a settlement disclosed last month by the self-regulatory body. The penalty was the biggest in a spate of Finra cases involving at least three other dealers in the past five months for similar violations.

Regulators are seeking to uphold the fairness of the bond-price reporting system known as Trace.

JPMorgan accepted the fine, the findings and a censure without admitting or denying the facts, according to the settlement. A spokesman for the bank declined to comment and George Smaragdis, a Finra spokesman, wouldn’t address the conduct of specific firms.

Morgan Stanley failed to report at least 4,200 trades on time from May 2011 through March 2013, resulting in $35,000 in Trace-related fines, according to documents released last month by Finra.

“The issues involved in this settlement were technical in nature and did not impair the accuracy of Trace data,” said Christy Jockle, a spokeswoman for Morgan Stanley. (MS:US)

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Interviews/Commentary

SEC’s White Supports BlackRock in Opposing Systematic Risk Label

Asset managers trying to forestall stricter U.S. oversight appear to have found an ally in the chairman of the Securities and Exchange Commission.

SEC Chair Mary Jo White, speaking at a conference sponsored by the Investment Company Institute, yesterday lent support to firms including BlackRock Inc. and Fidelity Investments, which are fighting efforts to officially label them sources of “systemic risk” to the financial system.

“I don’t think you are overreacting to the process,” White said.

Asset managers argue that some proposals under consideration by the Federal Reserve would make mutual funds more expensive and hurt their ability to make the best decisions for investors. Traditionally regulated by the SEC, the largest firms could come under Fed oversight if the Financial Stability Oversight Council, an umbrella group of U.S. regulators, decides they require tougher scrutiny because their collapse could trigger broader instability. The council was established by the 2010 Dodd-Frank Act, which sought to prevent a repeat of the 2008 financial crisis.

White, who has a seat on the 10-member council, hasn’t said how she’d vote.

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SEC’s White Says Staff Weighs Changes in Audit Committee Report

U.S. Securities and Exchange Commission staff should “examine the existing audit committee report to make it more useful to investors,” Chairwoman Mary Jo White said May 20 at the Financial Accounting Foundation Trustees Dinner, according to prepared remarks posted on the SEC website.

“Reporting requirements have not changed significantly in a number of years, and I think it is time to take a look at whether improvements can be made,” she said.

To contact the reporter on this story: Carla Main in New York at cmain2@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Andrew Dunn, Stephen Farr


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Companies Mentioned

  • JPM
    (JPMorgan Chase & Co)
    • $59.77 USD
    • -0.47
    • -0.79%
  • MS
    (Morgan Stanley)
    • $33.96 USD
    • -0.61
    • -1.8%
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