Monday 4th May 2015
NEWS TICKER: FRIDAY, MAY IST: MYOB will return on Monday next to the ASX, selling 228.3mshares at $3.65 in the company’s IPO. The company raised AUD833.1m, giving it an implied market capitalisation of AUD2.13bn. Bain Capital will retain 58% of the firm’s stock. “We saw a significant level of participation from eligible retail noteholders in the offer, with approximately 57% of holders exchanging their notes into shares. We see this wide range of investor interest as a strong vote of confidence in MYOB.” MYOB chairman Justin Milne says. ASX trading in MYOB shares is set to begin on 4 May under the code MYO. MYOB was listed on exchange from 1999 to 2009 – The volume of US municipal bonds soared by 42.1% in April, according to Thomson Reuters’ data; the ninth straight monthly gain. Issuers brought $37.76bn to market in 1,210 issues, up from $26.58bn in 939 issues in April 2014. Low interest rates, and the reluctance of the US Federal Reserve to raise rates over the near term has resulted in a dash by municipal issuers anxious to secure low cost funding as many refinance their debts. Other than refinancing, new issuance per se looks to be tailing off. New money transactions declined by 5.6% to $12.68bn from $13.43bn, while combined refunding and new money transactions increased 42.5% to $7.17bn from $5.03bn in April last year. Negotiated bond sales increased 62.4% to $28.97bn from $17.84bn, competitive deals rose 15.4% to $8.62bn from $7.47 billion and private placements plunged 87.2% to $162mn from $1.26bn. Sales of revenue bonds increased 49.9% to $22.84bn in 421 deals from $15.24bn in 306 deals. General obligation bond volume jumped 29.9% to $14.73bn in 788 issues from $11.34bn in 633 issues. Tax-exempt deals were up 42.4% to $33.88bn, while taxable deals were 24% higher to $3.30bn.Fixed-rate issues increased to $36.75bn in 1,167 issues from $24.85bn in 891 issues the previous year. The volume of deals with bond insurance more than doubled in par amount wrapped to $2.54bn in 161 deals from $1.06bn in 104 transactions. California claimed the top spot among states with $21.47bn of issuance thus far in 2015, up from its No. 2 ranking in the same period of last year with $12.03bn. Texas dropped from first to second with $17.85bn, an increase from $12.31bn the year before. New York remained in third place with $11.91bn so far this year, up from $10.29bn year to date - This morning Lloyds Banking Group said that in Q1 it had made a net profit of £913m and underlying profit was up 21% on the same period last year, to £2.2bn. Moreover, the group said that it was raising its net interest income target above the original target of 2.55%. Graham Spooner, investment research analyst at The Share Centre, says: “These results are good news for investors as they are ahead of forecasts and demonstrate a continued improvement in the company’s performance. The part UK government owned bank additionally reported that it has been benefitting from a resurgent British economy which has led to reduced bad loans and fuelled demand for mortgages. Lloyds announced its first dividend in February since being bailed out and investors should acknowledge that the increasing signs of recovery will boost hopes for a significant dividend growth in the near future. Analysts have become a little more positive on the group and its long term restructuring plans, which appear to be happening faster than expectations. However … the sector [remains] under pressure, as a result of regulatory issues and ahead of the next government sale.” - The Straits Times Index (STI) ended 0.24 points or 0.01% higher to 3487.39, taking the year-to-date performance to +3.63%. The top active stocks today were SingTel, which declined 0.23%, OCBC Bank, which declined 1.84%, DBS, which gained 0.19%, UOB, which gained 0.29% and Keppel Corp, with a 1.02% fall. The FTSE ST Mid Cap Index gained 0.47%, while the FTSE ST Small Cap Index rose 0.18%. The outperforming sectors today were represented by the FTSE ST Real Estate Holding and Development Index, which rose 1.00%. The two biggest stocks of the Index - Hongkong Land Holdings and Global Logistic Properties – ended 2.02% higher and 2.23% higher respectively. The underperforming sector was the FTSE ST Consumer Goods Index, which slipped 1.04%. Wilmar International shares remained unchanged and Thai Beverage declined 3.38%.

Blog

Regulatory Update

Protect Your Firm... And Your Personal Assets!

Monday, 30 July 2012 Written by 
Protect Your Firm... And Your Personal Assets! Hoping for a respite from regulatory change?  Think again.  Gathering forces may create a regulatory storm that is even more difficult than the one faced in the 2007-2009 financial crisis.  In this tempest, both the regulated and the regulators will have bull’s-eyes on their backs.  Regulators are likely to become more conservative in their analysis and more active.  It is therefore imperative to assess your firm now and prepare yourself to withstand regulatory inquiries.  You can also expect more scrutiny from investors who will seek to allocate funds only to those firms that they believe are fully complying with applicable laws and regulations. http://www.ftseglobalmarkets.com/

Hoping for a respite from regulatory change?  Think again.  Gathering forces may create a regulatory storm that is even more difficult than the one faced in the 2007-2009 financial crisis.  In this tempest, both the regulated and the regulators will have bull’s-eyes on their backs.  Regulators are likely to become more conservative in their analysis and more active.  It is therefore imperative to assess your firm now and prepare yourself to withstand regulatory inquiries.  You can also expect more scrutiny from investors who will seek to allocate funds only to those firms that they believe are fully complying with applicable laws and regulations.

What fuels this gathering storm?  Outright major misappropriations by the likes of Madoff and Peregrine's Wasendorf are part of the equation.  In addition, events such as the LIBOR-fixing scandal at Barclays, J.P. Morgan’s “London Whale” trading losses, and MF Global’s failure to segregate customer funds serve as cautionary examples.

These stories highlight that a firm’s assets, reputation, and in some cases, even the firm’s fundamental viability are at stake when things go awry.  As if that weren’t bad enough, senior executives face additional consequences.  In these and other similar incidents, personal assets can be at stake even when others are the primary wrongdoers.  



Think you are immune from these risks?  Think again.  Labaton Sucharow LLP, a plaintiff's law firm, recently published a unsettling study indicating that one in four financial industry professionals in the U.S. and U.K. believe wrongdoing is necessary for success.  If this study is credible, the message it sends to the general public is highly negative.  It speaks to senior management of alternative investment firms loud and clear: sometimes the best-intentioned executive may have an employee who hears an "unintended message" and veers off course.  Intended or not, the executive may ultimately bear responsibility. 

The first line of defense for an investment advisory firm and its executives is to build a culture in which the firm’s standards clearly and consistently meet all applicable regulatory and ethical expectations.  It is particularly important for firm leaders to reaffirm these standards and expectations during times of economic and operational stress, when legal and internal requirements may appear to conflict with business drivers (such as maximizing short-term results).  Employees must internalize that senior management will take the ethical route in order to maximize the long-term value of the firm—and expects them to do the same.

The second line of defense, at least in the U.S., is to develop a governance structure that satisfies the requirements specified in the U.S. Attorneys’ Manual.  This manual offers incentives to companies that adopt a comprehensive compliance and ethics program (and take certain actions upon the occurrence of alleged missteps).  A program that satisfies these requirements will contain elements in addition to those required by the SEC and CFTC.  Complying with the U.S. Attorneys’ Manual can be an invaluable safeguard that reduces the likelihood of an executive or his firm being charged with criminal violations.

The third line of defense is to undertake an honest self-assessment, and to consider the types of pressures that senior management and employees will encounter should the weakened state of the global economy continue.  Topics in the regulatory spotlight should be included in this assessment.  The intent here is to prepare for the possible pressures employees and senior management might face, thereby reducing the chance that hasty decisions are made in the heat of the moment. Ill-considered actions can carry serious penalties and act as a lightning rod for litigation by regulators, investors, and other third parties (such as credit providers).  Advance preparation will help your staff make faster and better decisions if the need should arise. 

You can't always remove that bull’s-eye on your back, but you can at least make the target less bright.

Deborah Prutzman

Deborah Prutzman is the founder and CEO of The Regulatory Fundamentals Group (RFG), a New York-based firm that designs and implements business and risk solutions for alternative asset managers and institutional investors. RFG's senior-led team employs a robust suite of tools, including practical alerts on new and potential industry developments and its powerful RFG Pathfinder® knowledge management platform which simplifies the challenges of operating in a regulated environment.  To learn more about The Regulatory Fundamentals Group call (212) 537-4058, email a representative at Information@RegFG.com or visit RegFG.com

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