Thursday 7th May 2015
NEWS TICKER: WEDNESDAY, MAY 6TH 2015: According to Mineweb, silver prices on average will decline 14% this year as speculation over US interest rates spurs a shift to alternative assets. Silver will drop to $16.50 an ounce from the average fixing price of $19.08 in 2014, Andrew Leyland, manager of precious- metal demand at Thomson Reuters GFMS, told Mineweb in advance of Thomson Reuters'World Silver Survey 2015 on behalf of the Washington-based Silver Institute. Silver futures fell 2.7% last month - The Federal Reserve Bank of New York will release its Q1 2015 Household Debt and Credit Report Tuesday, May 12 at 11:00 am. The Household Debt and Credit Report offers an updated snapshot of household trends in borrowing and indebtedness, including data about mortgages, student loans, credit cards, auto loans and delinquencies. In conjunction with the report, the New York Fed will also release a blog post that details the change in debt by credit score and age group - Moody's has assigned a limited default (/LD) designation to DTEK ENERGY BV's (DTEK) Ca-PD probability of default rating (PDR). At the same time, Moody's has affirmed DTEK's Ca corporate family rating (CFR), as well as the Ca rating of DTEK Finance Plc's $750m 7.875% notes due April 4th 2018. The change of the PDR to Ca-PD/LD follows the completion of the exchange of DTEK Finance BV's $200m 9.5% notes on the notes' maturity date April 28th. The transaction was effected pursuant to a UK Scheme of Arrangement. The notes were exchanged into new $160m 10.375% notes due 28 March 2018, issued by DTEK Finance Plc for this purpose, and $44.9m of cash, including an early exchange offer acceptance fee, which was paid to note holders on April 28th. The Ca rating of DTEK Finance B.V.'s exchanged notes was withdrawn. Moody's expects to remove the "/LD" suffix after approximately three business days. The outlook on all ratings remains negative - A major new campaign ‘World of Talent in Ireland’ was today launched by the American Chamber of Commerce Ireland and IDA Ireland. The campaign will initially target Ireland’s global graduate community, highlighting abroad the career opportunities that now exist in Ireland, with a view to attracting talent here. Speaking on the launch of the campaign Mark Redmond, Chief Executive of the American Chamber said “For Ireland to continue to grow its economy it will be essential that we attract the best and the brightest talent from across the world. This campaign is about reaching out to anyone who attended college here and therefore has an affinity with Ireland but is currently living and working elsewhere. We want to ensure that they know the great career opportunities that now exist here and how they can avail of them” - Idinvest Partners, the European private equity firm specialising in SMEs, has announced the final closing of its Idinvest Digital Fund II at €140m. The fund is entirely dedicated to financing the growth of developing businesses in the digital and new technology segments (web-based, media, mobile, e-commerce services and software) in France and across Europe. The fund has invested in ten companies so far, including Sigfox, Synthesio and Twenga; 30% of the capital has been called in and the fund is already delivering positive returns. The fund has also gathered prominent investors, such as Bpifrance and Idinvest’s historical partner, Allianz France, who are topping the list. Besides these, there is also a large number of insurance companies, banks, family offices and leading industry players and corporates, such as Lagardère and Up groups - According to local press reports, Botswana’s largest retailer Choppies plans to cross-list its shares at the Johannesburg Stock Exchange by the end of May, as it expand its business in sub-Saharan Africa. The multinational grocery and general merchandise retailer has stores in three Southern Africa countries and is reportedly looking to expand into Zambia and Tanzania this year. The firm will list 10% of its shares and plans to raise about $50m. Choppies commands a market capitalization of about $535mon the Botswana Stock Exchange and has a 32% share of Botswana’s retail market and plans to add five more stores, taking the total to 77 retail outlets, by December, followed by another 20 in the medium term - Credit Agricole Egypt (CAE) reports net profit of EGP236m (+60% YoY and +8% QoQ) in 1Q2015 and net interest income of EGP371m in (+30% YoY and +7% QoQ)over the period, higher than analyst forecasts. No other income statement component was disclosed, with the exception of taxes (around EGP104m for the period, signifying an effective tax rate of around 31%). Full financial statements are not available yet - The European Union is reported to be investigating McDonald's over claims its structure allowed it to avoid more than €1bn (£730m) in tax. It is alleged that the fast food purveyor exploited loophole concerning royalties through Luxembourg, allowing it to pay just €16m of tax on royalties worth €3.7bn between 2009 and 2013. Unions claim McDonald's Luxembourg subsidiary employs just 13 people, yet booked €834m of revenue in 2013 - roughly around €64m per worker - Smith Cooper accountancy and business advisory firm today announced the appointment of Catherine Desmond as partner to enhance the firm's private client services across the Midlands. Desmond joins the firm from the Private Client department of Saffery Champness where she specialised in advising clients across a range of sectors, including predominantly family businesses and landed estates. In her new role at Smith Cooper, Catherine will be concentrating on further developing the range of tax planning services the firm offer their private clients. Her work will focus particularly on the agricultural sector and landed estates, an area Desmond has extensive experience in - Nomis Solutions has appointed Michael DeGusta to lead the architecture and development of the company’s next-generation pricing platform. Working with progressive technology companies such as Apple, eCoverage, and ChoicePoint, DeGusta brings 20 years of experience to Nomis. “Retail banks face unprecedented challenges, and Michael is the ideal leader to architect our future and to bring Nomis and our client banks to the next level of price optimization and profitability management,” says Frank Rohde, Nomis CEO. “The bankers we meet with relate a growing awakening to the opportunities provided by innovative technology and how it can help them thrive in the face of mediocre economies, changing customers, disruptive competitors, and challenging regulators.” -

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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