GLOBAL REGULATORY BRIEFING APRIL 8, 2010

WEEK IN BRIEF China looked like it may adopt a more flexible yuan policy as the U.S. Treasury secretary dropped by Beijing for a visit, while in the eurozone Greece’s debt crisis deepened. Former Federal Reserve Chairman Alan Greenspan ate humble pie before a panel investigating the U.S. economic crisis, and Britain saw signs an accord was near on a global bank levy.

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IN THIS ISSUE QUOTES

FINANCIAL SERVICES

(I) REGULATORY REFORM Britain's Brown says bank levy accord close – report EU bank levy could reap 50 billion euros - study ”Too big to fail” in crosshairs of reform debate U.S. SEC seeks to protect debt-security investors US, India must push for balanced growth- Geithner U.K. market regulators see possible conflict in mandate - report Soros to fund Oxford institute to revisit deregulation, markets - report

(II) FINANCIAL CRISIS & ECONOMY Greece plunges deeper into crisis U.S. crisis panel sifts subprime wreckage, blames Greenspan No G20 consensus yet on growth strategy - Argentina Australia central bank raises rates, treasury warns commercial banks U.S. bank regulator to meet on crisis-era guarantee, bank fees U.S. Treasury says bailout repayments reach $181 billion, sees profit Fed's Dudley says can't ignore asset price bubbles, differs on rates U.S. bankruptcy filings rise to highest since 2005 U.S. judge rules against Argentina in debt case Southeast Asian central bankers see room for continued stimulus

(III) ENFORCEMENT & SUPERVISION U.S. regulator FINRA fines Citigroup in "stock borrow" program U.S. SEC charges Morgan Keegan with fraud over subprime loans U.S. trial over credit default swaps tests laws on insider trading AIG executive Cassano still faces SEC probe U.S. judge OKs settlement in Daimler bribery case British FSA's US-style tactics to bag more abusive traders U.K. regulators conducting stress tests for global banks – report Watchdog reminds U.S. auditors to watch unusual deals U.S. companies put up barriers to proxy fights Australian exchange bars Romanian Timis - report EU power grab threatens accounting-standards convergence - report Accounting rule makers say to propose loan rule within weeks Medvedev: Russia should wait for U.S., EU accounting moves - report Basel fog puts brakes on big bank mergers India changes rules for company results reports Earnings pressure encouraging fraud in India - survey India central bank asks banks to assess risk preparedness Brazil regulator sets 60-day quiet period for issuers

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(V) TAX White House distances itself from Volcker tax remarks U.S. tax unit aimed at wealthy begins audits Dutch government plans to double tax-evader penalties US health law strips companies of sweet tax deal U.S. tax authorities could tap refunds for health insurance penalties

(VI) EXCHANGES AND TRADING PRACTICES U.S. SEC eyes IDs for high frequency traders Rapid-fire trading poses little risk -exchange CEOs Banning co-location would not end access questions – U.S. regulatory official SGX to guarantee for some trades

(VII) FUNDS MANAGEMENT Geithner urges EU to not discriminate against U.S. funds South Korean regulator to weed out low-value funds - report

(VIII) CURRENCY Geithner, China’s vice premier meet amid report of yaun move China keeps annual bank forex quotas unchanged - sources China central bank urges more cross-border yuan settlement

(IX) TRADE & CROSS BORDER US offers fix to WTO cotton dispute with Brazil Banks criticise Moscow restrictions on foreign listings - report

(X) COMMODITIES & ENERGY US to host major economies meeting on climate PDVSA, Russia to spend up to $80 million in Venezuela oil belt U.S. climate bill sets oil "rack" transport tax -source U.S., Canada raise car fuel efficiency, set CO2 standard Kazakhs threatens to deport Karachaganak employees Vale accuses EU steelmakers of anti-competitive actions Indonesia cocoa exporters seek to rework contracts

(XI) ISLAMIC FINANCE Dubai's Limitless target of first tribunal claim Malaysia to likely issue U.S. dollar Islamic bond

INDUSTRIAL POLICY Chinese cabinet approves bank funding requests, points to Hong Kong – report

TELECOMS & INTERNET US court vacates FCC ruling on Comcast Web traffic China cyber-spies target India, Dalai Lama -report UK delays broadband tax Billion dollar bids expected at India spectrum auction PayPal halts personal payments in Japan

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Russian central bank to control e-money soon - report France passes bill to open up online gambling market

INTELLECTUAL PROPERTY RIGHTS Google sued by visual artists over book scanning

PEOPLE U.S. Treasury appoints two executives to AIG board Venezuela names new mines and industry minister U.S. lawmaker bans contact with aide who became exchange lobbyist - report

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QUOTES

"Despite everything the EU and the euro zone have done there is still a lack of clarity (and) confusion about what they intend to do, when they intend do it and how much would be involved. It is now up to the Greek government to go publicly to the EU and IMF and ask for the cash and the support."

Chris Pryce, senior Greece analyst for rating agency Fitch

"If at the end of the day we need to raise taxes, we should raise taxes."

White House economic adviser Paul Volcker

"Mr. Volcker was speaking for himself and not the administration. The president has not proposed this idea nor is it under consideration."

A White House official

"The economic crisis and the failure of economists to predict it and protect society illustrate that economics as a profession needs to re-earn its reputation and regain its mantle of expertise."

Robert Johnson, director of Institute for New Economic Trends, a George Soros-founded think tank helping to set up a new economics institute at Oxford University with a goal of re-examining thinking about free markets and deregulation

"I am confident that holding rates down at artificially low levels over extended periods encourages bubbles, because it encourages debt over equity and consumption over savings."

Kansas City Federal Reserve Bank President Thomas Hoenig

"Did we make mistakes? Of course we made mistakes."

Former U.S. Federal Reserve Chairman Alan Greenspan, appearing at a hearing of the Financial Crisis Inquiry Commission.

"If you look at the (high-frequency trade) market makers around October 2008 and the first month of 2009, the guys were there all the time, two-sided markets. Were the bid-offer spreads there? They were there ... Go look at the bond market -- blank screens. Go look at the derivatives market -- blank screens."

Mark Hemsley, CEO of electronic trading platform BATS Europe

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"The FSA has been adopting a more aggressive approach akin to the U.S. model, especially the move to criminal rather than civil sanctions."

Merryck Lowe, managing director at Alvarez & Marsal Dispute Analysis and Forensics

"The social media clouds of cyberspace we rely upon today have a dark, hidden core. There is a vast subterranean ecosystem to cyberspace within which criminal and espionage networks thrive."

Ron Diebert of the University of Toronto, co-author of a report on a cyber-espionage group in China that stole documents from the Indian Defense Ministry and the Dalai Lama's office

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FINANCIAL SERVICES

(I) REGULATORY REFORM

G20 | REUTERS, APRIL 5, DAILY TELEGRAPH, APRIL 6

Britain's Brown says bank levy accord close – report

British Prime Minister Gordon Brown said the world's large economies were close to agreeing on a global tax on banks to help prevent another financial crisis, the Financial Times reported. The FT said Brown played down expectations of a deal at the next Group of 20 meeting in June but that he wanted an accord struck at the G20 summit in Seoul in November, along with capital rules to reinforce banks against a future crisis Brown said the scene was set for a "global responsibility levy". He said Britain, France and Germany were now broadly agreed on the need for a levy and that he hoped the United States would come on board. The newspaper said Brown declined to say how much the tax might raise from British banks but cited the annual 1.2 billion euros ($1.6 billion) envisaged by Germany for its banks and the 10 billion dollars planned for the United States levy as examples. The Daily Telegraph reported that the IMF was prepared to recommend an "excess profits tax" on banks that would go with an U.S. style balance sheet levy.

EU | REUTERS, APRIL 6

EU bank levy could reap 50 billion euros - study

The European Union could reap up to 50 billion euros ($67 billion) by imposing a special levy on banks and may push ahead with such a tax regardless of whether the U.S. and others follow suit, an EU report said. The report, which will form the basis of EU efforts to introduce such a levy, said based its calculations on a proposed U.S. rate. Learn more

US | REUTERS, APRIL 5

”Too big to fail” in crosshairs of reform debate

A U.S. Democratic lawmaker and top bank regulator defended legislative efforts that they say would end the perception that some firms are "too big to fail," in a challenge to Republican complaints about the financial reform bills. The defense of the financial regulation overhaul moving through Congress comes as lawmakers are in the middle of a two-week recess. When they return next week, financial reform is expected to be the top legislative priority. Richard Shelby, the top Republican on the Senate Banking Committee, said before the recess that a Democratic bill approved by the panel failed to end the "too big to fail" problem of an implied government duty to rescue troubled major institutions because of the impact of failure.

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Representative Paul Kanjorski, a leading Democrat on the House Financial Services Coomittee, said the House bill would ensure no firm poses too much risk, by giving regulators the power to proactively limit products or break up large financial firms. He predicted the Senate version would soon have a similar provision. Federal Deposit Insurance Corp Chairman Sheila Bair said that the bills also give the FDIC the power it needs to orderly dismantle large failing firms. She said in a Wall Street Journal opinion article that "too big to fail" still exists today, giving large firms a funding advantage, and reform is needed quickly to end it.

US | REUTERS, APRIL 6

U.S. SEC seeks to protect debt-security investors

U.S. regulators are considering a plan that would prevent banks and other sponsors from selling asset-backed securities without assuming any risk themselves, sources familiar with the Securities and Exchange Commission's approach said. The SEC is mulling a proposal that would require asset-backed security sponsors to retain 5 percent of the credit risk of the security, said the sources, who requested anonymity because the plan is still in flux. The SEC proposal under consideration would also require banks and other ABS issuers to disclose in-depth information on every loan in a mortgage-backed security, the sources said. The proposal brings the securities regulator in line with the Obama administration's plans to try to prevent banks and other financial players from selling shoddy financial products to investors.

INDIA | REUTERS, APRIL 6

US, India must push for balanced growth - Geithner

U.S. Treasury Secretary Timothy Geithner said the United States and India must work together on rebalancing global growth and revamping a battered financial system. Speaking during a visit to India for economic partnership talks, Geithner said the country was emerging stronger and faster than most large economies and that the United States and India hsome common problems. These include designing a financial system to foster innovations and infrastructuand extending financial services to people outside traditional banking system.

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The Treasury chief gave a nod to India's demands for more representation for developing economies in the World Bank and International Monetary Fund, saying they needed to be more effective and representative. The representation issue is expected to be considered later this month at the institutions' spring meetings in Washington. The economic partnership talks were focused on economic stability, infrastructure finance, and financial sector reforms and cooperation. They aim to bring more prominence to the bilateral U.S.-India relationship, which has taken a back seat in recent years as U.S.-China ties have deepened. Learn more

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UK | WALL STREET JOURNAL, APRIL 6

U.K. market regulators see possible conflict in mandate - report

Britain’s Financial Services Authority faces a possible conflict in its roles of regulation and promoting London as a financial center, the Wall Street Journal reported, citing agency officials. The newspaper quoted FSA Chairman Adair Turner as telling a closed commission last month that a duty to promote national firms “that can in a subtle way create a conflict of interest, and it would probably be better if we didn't have that objective." It said the British Parliament was considering a bill to make the FSA's primary objective maintaining financial stability. Its duties are now to protect consumers, ensure market confidence, promote financial education and fight crime. Britain's Conservative Party has pledged to abolish the FSA and transfer its regulatory powers to Brtiain’s central bank if the party wins a general election called for May. Learn more

UK | THE TIMES, APRIL 5

Soros to fund Oxford institute to revisit deregulation, markets - report

Financier George Soros will help fund the creation of a new economics institute at Oxford University with an aim of steering the academic discipline to a re-examination of free markets and deregulation, The Times of London reported. It said the institute is being funded by the New York-based Institute for New Economic Thinking (Inet), which Soros founded last year with a $50 million pledge and a goal of stimulating debate about economic and market regulation. The Times said Soros donated $5 million to Oxford's James Martin 21st Century School, which is putting in another $5 million, to create the new institute. Soros hopes to fund about 12 such institutes around the world, and Inet was talking to Cambridge as well as universities in Germany, France, China, Italy and the United States. Learn more

(II) FINANCIAL CRISIS & ECONOMY

GREECE | REUTERS, APRIL 8

Greece plunges deeper into crisis

Markets pounded Greek bonds and banking stocks, driving the debt-stricken euro zone member's borrowing costs to new highs and pushing it closer to tapping a last resort EU/IMF safety net. The government struggled to reassure markets it can stay solvent. But scepticism at a dearth of details about a European Union and International Monetary Fund lifeline continued to pile pressure on a country already struggling to cover its wide fiscal gap and huge public debt load. Chris Pryce, senior Greece analyst for rating agency Fitch, said Athens' only choice now was to ask for help. Greece insists it prefers to borrow from markets and will use the European Union/International Monetary Fund safety net agreed only as a last resort.

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Germany, which can veto Athens' access to the aid package, also held firm on its position that it is only a last-ditch option, with a spokesman saying that, despite the jump in borrowing costs, "the government's position remains unchanged".

US | REUTERS, APRIL 7

U.S. crisis panel sifts subprime wreckage, blames Greenspan

The wreckage of Wall Street's subprime mortgage machine was laid bare by a U.S. congressional panel that pointed the finger at Alan Greenspan for not stopping it from running out of control. The former Federal Reserve chairman -- revered as an economic oracle before he retired in 2006 -- defended his legacy in a panel hearing, which also heard a former Citigroup executive say he had warned of the subprime danger. The Fed “utterly failed to prevent the financial crisis," said commission member Brooksley Born. Greenspan acknowledged that he and other financial leaders made mistakes in failing to comprehend the scope of market risks. But former Citigroup executive Richard Bowen told the panel that he alerted senior managers to the dangers, including former U.S. Treasury Secretary Robert Rubin, then chairman of Citigroup's executive committee. Looking ahead, Greenspan recommended that U.S. banks be compelled to meet higher standards for risk-based capital and that collateral requirements be boosted for globally traded financial products, no matter what firm is trading them. Greenspan also said that banks, and possibly all financial firms, should be required to hold contingent capital bonds that convert to equity if capital fell below set levels. The commission's hearings were not expected to unearth revelations that significantly alter the tale of the crisis, which is fairly well understood by now. But its proceedings could add momentum to a push for a regulatory overhaul. The commission, set up by Congress, must make a final report by Dec. 15. Learn more

G20 | REUTERS, APRIL 7

No G20 consensus yet on growth strategy - Argentina

The G20 should agree to scrap farm subsidies in advanced economies and take other steps to bridge the rich-poor divide, a senior Argentine official said, but he said there was no consensus yet within the group on policy reforms. It would be premature to expect any big agreements at the Group of 20 summit in Toronto on June 26-27, said Nestor Stancanelli, Argentina's G20 representative, and deputy secretary of international economic negotiations. The G20 developing and advanced economies agreed last year to work on a new framework for economic growth, and much of the reform talk has focused on fixing the banks and pressing China to have a more flexible currency. But some developing economies want to see more of an emphasis on policies for promoting development and redistributing income, which require changes to agriculture subsidies and bank regulations, Stancanelli said. He said the European Union, Japan and others should amend their agriculture policies to end subsidies and allow the poorest nations duty-free access to their markets. Stancanelli said he was surprised that a letter sent last week by five leaders to their fellow G20 members did not mention the issue of development, which he called “a substantial issue.” He said Brazil and South Africa held similar views on the issues that needed addressing.

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AUSTRALIA | REUTERS, APRIL 6

Australia central bank raises rates, treasury warns commercial banks

Australia's central bank increased its key cash rate by 25 basis points to 4.25 percent, the fifth hike since October, as it gradually normalises policy to reflect a rapidly recovering economy. Australia's Treasurer Wayne Swan said commercial banks would be 'arrogant in extreme' if they raised interest rates faster than the central bank. Learn more

US | REUTERS, APRIL 7

U.S. bank regulator to meet on crisis-era guarantee, bank fees

U.S. bank regulators will meet next week on whether to extend a crisis-era guarantee designed to help small banks, and whether to change how it charges for deposit insurance, possibly making banks pay more if they have risky pay plans. The Federal Deposit Insurance Corp said in the agenda for the meeting next Tuesday that it will also discuss the "reporting and planning" of large banks. The agency earlier this year floated a controversial plan that would require banks with risky compensation schemes, such as huge cash components and incentives for short-term results, to pay more for deposit insurance. FDIC Chairman Sheila Bair has said there is ample proof that irresponsible pay schemes can be a contributing factor to the collapse of banks. Other regulators have questioned the plan, saying there may not be enough evidence that pay practices are a big factor in bank failures. Learn more

US | REUTERS, APRIL 2

U.S. Treasury says bailout repayments reach $181 billion, sees profit

The U.S. Treasury Department said total bailout repayments have reached $181 billion with the receipt of $3.4 billion from insurer Hartford Financial Services Group and another $1 billion installment payment from General Motors Co. The Treasury said repayments to the Troubled Asset Relief Program are running well ahead of 2010 repayment projections made last fall. It currently estimates that $245 billion in bank investments, including larger bailouts of Citigroup and Bank of America, "will earn a profit thanks to dividends, interest, early repayments and the sale of warrants.” These investments were initially projected to produce a $76 billion loss for taxpayers. However, for TARP as a whole, including investments in automakers, insurer American International Group and housing rescue efforts, the Treasury is still projecting a loss. Treasury Secretary Timothy Geithner last month told U.S. lawmakers that the TARP loss estimates had fallen from around $500 billion when the Obama administration took office last year to less than $100 billion. Learn more

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US | REUTERS, APRIL 7

Fed's Dudley says can't ignore asset price bubbles, differs on rates

Asset price bubbles are hard to identify but occur "fairly frequently," and uncertainty should not dissuade policymakers from addressing them, New York Federal Reserve Bank President William Dudley said. Dudley said bubbles in assets such as real estate, driven by credit, tend to be more dangerous than those in stocks and carry greater risks for the financial system and broader economy. Policymakers "need to be more proactive” in acting to prevent bubbles, even if action is not always called for, he said in response to a question. Dudley said interest rates were too broad a tool and urged instead relying more on regulation and verbal warnings to discourage bubbles. U.S. interest rates, currently at a record low near zero, need to remain "exceptionally low" to support a still fragile economy and create more jobs, he said. Separately, however, Kansas City Fed President Thomas Hoenig said that interest rates kept too low for too long encourage risky financial behavior, and he recommended raising borrowing costs to prevent another boom and bust. Learn more Learn more

US | REUTERS, APRIL 1

U.S. bankruptcy filings rise to highest since 2005

More Americans filed for bankruptcy protection in March than at any time since federal bankruptcy laws were overhauled in 2005, reflecting the unevenness of the economy's stabilization after recession. There were 158,141 U.S. bankruptcy petitions, covering consumers and businesses, filed in March, according to preliminary data compiled from court filings and released by Automated Access to Court Electronic Records, or AACER. The total increased 20 percent from 132,005 last March and jumped 35 percent from February's 117,240, March's filings were 19 percent greater than the 133,393 recorded in October 2009. That total had been the highest since reforms to the U.S. Bankruptcy Code were implemented in October 2005. These made it harder for consumers to erase debts and for businesses to restructure without creditor interference. Learn more

ARGENTINA | REUTERS, APRIL 7

U.S. judge rules against Argentina in debt case

Some $100 million in Argentine Central Bank deposits in New York can be seized to pay two investment funds that sued Argentina over unpaid debt, a U.S. federal judge ruled. The Argentine funds held in the U.S. Federal Reserve Bank in New York have been frozen since 2006, but another judge delayed their attachment pending an investigation into whether the Central Bank could be considered part of the Argentine state. Judge Thomas Griesa of the U.S. District Court of the Southern District of New York ruled that funds of the Central Bank are really those of the Republic of Argentina, and he rejected Argentine government arguments that the bank was autonomous. The plaintiffs in the case are EM Ltd and NML Capital -- an affiliate of Elliott Management Corp and one of the biggest holders of Argentine defaulted debt. The ruling is likely to be appealed.

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The ruling came a week before Argentine President Cristina Fernandez's cash-strapped government seeks to woo investors by swapping some $20 billion in defaulted bonds left over from the country's massive 2002 default. Next week's swap offer is meant to neutralize the threat of lawsuits from holdout bondholders trying to recover the face value of their defaulted debt.

SOUTHEAST ASIA | REUTERS, APRIL 7

Southeast Asian central bankers see room for continued stimulus

Southeast Asian central bankers see scope for keeping economic stimulus policies in place as long as the recovery remains fragile, Philippine deputy central bank governor Diwa Guinigundo said. When the time comes to unwind those measures, however, they will not be able to synchronise steps and will have to act individually, Guinigundo told Reuters after a meeting of central bankers from countries of the Association of Southeast Asian Nations. He said pledges to enhance the exchange of information with regard to policy would be useful.

(III) ENFORCEMENT & SUPERVISION

US | REUTERS, APRIL 6

U.S. regulator FINRA fines Citigroup in "stock borrow" program

Citigroup Inc has been fined $650,000 by an independent U.S. brokerage regulator for disclosure and supervisory failures relating to a "stock borrow" program intended to help clients sell shares short. In its first enforcement action against such practices, the Financial Industry Regulatory Authority said the bank's Citigroup Global Markets Inc unit failed to properly disclose risks to retail and other customers in its direct borrow program, which extended more than 4,000 loans averaging $301 million a year. FINRA said that from Jan. 1, 2005 to Nov. 30, 2008, more than 2,300 customers lent the program more than 770 securities that were hard to borrow, mainly because numerous short-sellers had already borrowed them to use as collateral. Citigroup's brokers did not make clear to customers that most of the loaned securities were used in short-selling, which can cause them to lose value, and that customers could sell them at any time even while they were on loan, FINRA said. FINRA enforcement chief James Shorris said the program created “an artificial impediment to liquidity.” Learn more

US | REUTERS, APRIL 7

U.S. SEC charges Morgan Keegan with fraud over subprime loans

U.S. regulators charged Morgan Keegan & Co and two employees with fraud for overstating the value of subprime mortgages in its mutual funds, resulting in more than $1 billion of investor losses. The charges by the U.S. Securities and Exchange Commission and the Financial Industry Regulatory Authority are the latest in a still small number of enforcement actions by U.S. regulators arising out of the nation's housing and credit crises.

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The SEC alleged that Morgan Keegan, a unit of Regions Financial Corp, failed to properly price its mortgage holdings, and "recklessly" sold shares of its funds to investors based on inflated prices. The SEC accused portfolio manager James Kelsoe of telling his accounting department to make repeated, arbitrary "price adjustments" that increased the fair values of securities. It said department head Joseph Thompson Weller failed to ensure the securities and mutual funds were properly priced. Several Morgan Keegan funds, including some pitched as conservative investments, lost more than half their value in 2007 as prices fell for securities backed by subprime and other risky debt.

US | REUTERS, APRIL 7

U.S. trial over credit default swaps tests laws on insider trading

A trial began of Deutsche Bank AG bond salesman Jon-Paul Rorech and former Millennium Partners hedge fund portfolio manager Renato Negrin on civil insider trading charges, representing the U.S. Securities and Exchange Commission's first enforcement involving credit default swaps. The case is considered a test of whether regulators can make insider trading cases in the unregulated market for the swaps. Defense lawyers said in their opening arguments in Manhattan federal court that the SEC does not have the authority to regulate the CDS at issue because they are not securities-based swap agreements under securities laws. SEC lawyer Richard Primoff said the case was “like any other insider trading case … about selective disclosure.” The agency contends that Rorech obtained confidential information from Deutsche Bank investment bankers about a change to a proposed bond offering by the Dutch media conglomerate VNU. It said he illegally tipped Negrin, who took a position on the swaps to reap $1.2 million in profits. Both men have denied any wrongdoing. They have not been criminally charged. Learn more

US | REUTERS, APRIL 5

AIG executive Cassano still faces SEC probe

Joseph Cassano, who ran London-based AIG Financial Products and oversaw its disastrous accumulation of credit default swaps, is likely to dodge criminal prosecution after nearly two-years of investigation, according to media reports. But U.S. securities regulators will keep investigating whether he should face civil liability, even if prosecutors drop the matter, according to people familiar with the probe. As recently as mid-March, prosecutors and lawyers from the Securities and Exchange Commission interviewed potential witness in the investigation, sources said. They also confirmed that prosecutors were nearing a decision on whether to pursue criminal charges, but cautioned that no final judgment had been made. Cassano is the former chief executive of AIG Financial Products, which nearly brought down AIG in September 2008 after writing tens of billions of dollars worth of insurance-like contracts on complex securities backed mortgages that turned out to be toxic.

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US | REUTERS, APRIL 1

U.S. judge OKs settlement in Daimler bribery case

Daimler AG's $185 million settlement of allegations the luxury car and truck maker violated U.S. anti-bribery laws by showering foreign government officials with money and gifts to win contracts was approved by a federal judge. Daimler settled charges by the Justice Department and the Securities and Exchange Commission, but remains subject to a two-year deferred prosecution agreement and oversight by an independent monitor. Daimler's German and Russian units each agreed to plead guilty to two counts of violating U.S. anti-bribery laws. Its China subsidiary will be subject to the two-year deferred prosecution agreement as well. Former FBI Director Louis Freeh will serve as the independent monitor to oversee Daimler's compliance with anti-bribery laws. The settlement is the latest example of a widening crackdown by the U.S. government on alleged violators of U.S. anti-bribery laws and represents one of the most wide-ranging cases brought so far against a foreign corporation. Learn more

UK | REUTERS, APRIL 1, FINANCIAL TIMES, APRIL 3

British FSA's US-style tactics to bag more abusive traders

Britain's Financial Services Authority will catch more traders for market abuse now it is copying tougher U.S. tactics, but it still doesn't use all the U.S. tools. The FSA embarked on a fundamental culture change about two years ago when the financial crisis was unfolding, but the complexity of fraud and market abuse cases is such that it takes time to bring suspects before a court. More prosecutions are now in the pipeline. Seven people were charged in a UK insider-dealing case in March following a 21-month probe. The FSA is prosecuting three other insider-dealing criminal cases. The FSA, which traditionally allowed firms to police themselves, has come under rising political heat. The watchdog faces being scrapped if the opposition Conservative party wins national elections on May 6. The FSA is also prepared to use more sophisticated, U.S.-style means to catch abusers, such as teaming up with the Serious Organised Crime Agency, as it did to conduct last month's dawn raids. But the key American import that will make a huge difference is the FSA’s willingness to offer witnesses immunity from prosecution. The Financial Times reported that the FSA saw the number of whistleblowers more than double from 835 in 2007 to 1,890 in 2009. The agency has encouraged financial sector employees to pass on information about irregularities in exchange for lenient treatment. Some lawyers lament that the FSA will have no recourse to another favoured U.S. tactic, plea bargaining, because sentences for financial fraud are much lighter in Britain.

UK | THE SUNDAY TIMES, APRIL 4

U.K. regulators conducting stress tests for global banks – report

Britain’s Financial Services Authority has been conducting stress tests on British operations of foreign banks, The Sunday Times reported. It said the agency wants banks to ensure that their British businesses are self-sufficient in capital.

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US | REUTERS, APRIL 7

Watchdog reminds U.S. auditors to watch unusual deals

The U.S. auditor watchdog reminded corporate accounting firms to watch for fraud or misstatements if they detect "significant unusual transactions" when doing their work. The "audit practice alert" from the Public Company Accounting Oversight Board comes in the wake of scandals at firms like Lehman Brothers Holdings and Satyam Computer Services, where auditors have been accused of missing transactions that hid what was truly going on at the firms. The PCAOB has recently launched an investigation into Lehman's audit after the firm's bankruptcy examiner claimed the investment bank hid some $50 billion in assets by using an accounting technique called "Repo 105," according to a person familiar with the matter. The audit practice alert is the second major communication the PCAOB has sent to auditors in recent weeks that would address concerns cited by the Lehman examiner about the role of its auditors, Ernst & Young, in the investment bank's collapse. Ernst & Young has denied it did anything wrong.

US | REUTERS, APRIL 1

U.S. companies put up barriers to proxy fights

Heading into an annual proxy season bristling with investor anger over executive salaries, some U.S. companies are working overtime to silence sensitive shareholder resolutions, and they are getting more aggressive this year, say attorneys and advocates on both sides of the contests. As of March 23, companies had filed challenges with the SEC to almost one-third of the 739 proposals that shareholders had submitted for 2010, according to RiskMetrics Group, a Maryland advisory firm. The figure was 23 percent in 2007, and has risen steadily since then. Technically, many companies are asking the SEC for so-called "no-action" rulings, or assurances the agency will not act if the company leaves a proposed measure off a ballot. Many proposals are withdrawn as part of a compromise. Among cases the SEC has decided so far this year, the agency sided with companies 71 percent of the time, roughly the same as in past years, said RiskMetrics publications director Ted Allen. He added the rate might go down slightly as the year goes on, since the SEC tends to rule on the simpler cases first. Companies are getting more aggressive in areas like making pension funds prove they own enough stock to be eligible to submit resolutions, Allen said. Also, more new resolutions are being submitted this year, giving companies a chance to quibble about whether the wording fits legal requirements.

AUSTRALIA | AUSTRALIAN FINANCIAL REVIEW, APRIL 6

Australian exchange bars Romanian Timis - report

The Australian Securities Exchange (ASX) has prevented Romanian businessman Frank Timis from gaining major shareholdings and directorships in two listed companies - Global Iron and International Petroleum. In a letter to the two companies last week, the ASX said the proposed deals would mean the companies may not "meet the standards required of listed entities and their officers," it said. Timis has previously been blackballed by the Toronto Stock Exchange and the London Stock Exchange’s Alternative Investments Market, The Australian newspaper reported.

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EU | FINANCIAL TIMES, APRIL 4

EU power grab threatens accounting-standards convergence - report

An apparent power grab by the European Union's new internal market commissioner could potentially scotch hopes of a global consensus on accounting standards being reached, the Financial Times reported. The newspaper said commissioner Michel Barnier has proposed reform of the International Accounting Standards Board, suggesting that funding of the body, which sets international accounting rules, could be contingent on whether the organisation bows to political pressure from the European Commission to change its governance. Last September G20 finance ministers gave their support to the establishment of a single set of high quality, cross-border accounting standards, and Barnier's proposals raise questions about IASB independence during a crucial period of talks, the FT said.

GLOBAL | REUTERS, APRIL 7

Accounting rule makers say to propose loan rule within weeks

Two top accounting rulemakers said they still plan to focus on transparency rather than stability, just weeks before they are to propose a new rule that could change the way banks value loans on their books. International Accounting Standards Board Chairman Sir David Tweedie and U.S. Financial Accounting Standards Board Chairman Robert Herz said that they expect to propose in the next few weeks changes in how banks value the loans on their books. The proposal on financial instrument accounting would be open for public comment and considered with other proposals on credit impairments, they said at the Japan Society in New York. The accounting rulemakers have faced pressure from banks and politicians to incorporate economic stability concerns into their accounting rules. Tweedie noted that politicians held that a major objective of financial reporting was stability, but said “we think it's transparency." Herz said the boards would also look later this year at the issue of estimating credit impairment, which traditionally has done “with a fair degree of rose-colored glasses, particularly in downcycles."

RUSSIA | ITAR-TASS, APRIL 6

Medvedev: Russia should wait for U.S., EU accounting moves - report

Russian President Dmitry Medvedev said he supports harmonizing financial accounting in Russia, following a lead set European and U.S. efforts, ITAR-Tass reported. It said Medvedev told an anti-corruption council that it makes sense to wait for a convergence of U.S. and EU standards before Russian legislation is proposed.

GLOBAL | REUTERS, APRIL 7

Basel fog puts brakes on big bank mergers

Banks are keeping takeover plans on ice until the impact of upcoming changes in capital rules becomes clearer and they can be sure deals will not restrict payment of dividends and staff. Proposed reforms of capital and liquidity requirements -- dubbed Basel III -- are the biggest deterrent to dealmaking. The plan is to force banks to hold more and better quality capital, but institutions will not know how much more they need to hold until late this year. Andrew Lim, analyst at Matrix Group in London, said banks were wary of acting before getting more clarity.

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The worry for predators is twofold. A big deal would probably shave capital ratios at a time when they are being encouraged to keep strong buffers, and it may also be unclear how the changes will impact the prey's capital position. More clarity should emerge after the Basel III process releases assessments on the impact of proposed changes after June, and when it unveils "appropriately calibrated" standards by the end of the year.

INDIA | REUTERS, APRIL 5

India changes rules for company results reports

India's markets regulator said it had changed the time period for listed companies to file quarterly and annual results, in order to streamline the disclosure of financial results. Listed companies will now have to submit audited quarterly results within 45 days from the end of the relevant quarter, the Securities and Exchange Board of India (SEBI) said. Currently, listed Indian companies submit unaudited results within 30 days from the quarter-end. SEBI also reduced the period to submit audited annual financial results within 60 days from the end of the financial year, in place of 90 days currently. . The regulator also said companies would have to report their asset-liability position along with their half-year results. Currently, companies disclose their balance sheet position only at the time of annual results.

INDIA | REUTERS, APRIL 6

Earnings pressure encouraging fraud in India - survey

The incidence of corporate fraud, particularly financial statement fraud, is rising in India, largely due to pressure to meet earnings targets and weak internal control systems, a survey by consultancy KPMG showed. More than 60 percent of respondents said meeting market expectations and performance based remuneration were the main motives for fraud, with others also citing tax evasion as key. The survey of senior managers at nearly 1,000 firms in India showed bribery and corruption are viewed as an inevitable aspect of doing business in the country, particularly while seeking routine regulatory approvals and to win new business. Recent volatile economic conditions and increasing business and technological complexities led to greater opportunities for fraud, said Rohit Mahajan, executive director of KPMG's forensic advisory practice in India, at the launch of the report.

INDIA | REUTERS, APRIL 7

India central bank asks banks to assess risk preparedness

The Reserve Bank of India (RBI) asked banks keen on migrating to an internal models approach for market risk to assess their preparedness in line with its guidelines. It said banks should include incremental risk in their modeling. Learn more

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 19

BRAZIL | DOW JONES, APRIL 5

Brazil regulator sets 60-day quiet period for issuers

Brazil's stock market regulator, CVM, set a 60-day quiet period prior to registration for companies issuing shares or debt, affective Aug. 1, Dow Jones reported. It said the rule comes into effect on Aug. 1, and that the quiet period is now defined more loosely as the 'beginning' of the issue process. Learn more

(V) TAX

US | REUTERS, APRIL 7

White House distances itself from Volcker tax remarks

The White House distanced itself from remarks by former Federal Reserve Chairman Paul Volcker that higher U.S. taxes might one day be needed to control the country's deficit. Volcker, an influential adviser to President Barack Obama, made the remarks in New York. A White House official said Volcker was speaking for himself, and not for the administration.

US | REUTERS, APRIL 1

U.S. tax unit aimed at wealthy begins audits

Audits are underway at a new U.S. Internal Revenue Service unit set up to catch rich tax cheats hiding funds in tax shelters. The chief of the new group, Donna Hansberry, said audits have begun in the last several months, but none have been wrapped up yet. The so-called global high wealth unit, created late last year, takes aim at individuals hiding income using complex business structures, and is focusing on trusts, real estate, and other business entities controlled by individuals with assets in the tens of millions of dollars and more. The agency is taking a measured approach and doing a “risk assessment” of individual cases, according to Hansberry, an IRS veteran who spent nearly two decades as a trial attorney in the Chicago IRS office. A key change from the agency's earlier approach is that the agency is looking at the individual and their business structures together. Hansberry said it was too soon to comment on whether those with income abroad were a big part of the group her unit is auditing.

NETHERLANDS | REUTERS, APRIL 6

Dutch government plans to double tax-evader penalties

The Dutch government plans to double fines to 30 percent for tax evaders who voluntarily report their hidden funds, the finance minister said. In a weekly appearance on business TV channel RTL Z, Finance Minister Jan Kees de Jager said the chance of getting caught was

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 20

growing as time went on. It was not immediately clear when the new, higher penalty rate would take effect.

US | REUTERS, APRIL 1

US health law strips companies of sweet tax deal

As U.S. corporate heavyweights warn about multimillion-dollar charges related to the Obama administration's landmark healthcare bill, experts say the one-time hit simply curbs a government giveaway. At issue is a sweetener added in 2003 by lawmakers to legislation providing a prescription drug benefit to Medicare, the health insurance plan for the elderly. That incentive was a 28 percent subsidy for retiree coverage, plus a tax deduction for the payment, essentially creating a double benefit not usually granted under tax rules. The carrot was added to ensure employers would not drop their own retiree coverage. The legislation signed by President Barack Obama last week keeps the subsidy, but no longer lets companies deduct the subsidy from their income. That change has prompted a slew of companies to warn investors of one-time charges, generally in the millions of dollars to $150 million, although AT&T Inc reported a $1 billion charge. Corporate America complains the change amounts to a tax increase, while the White House says it essentially closes a loophole.

US | REUTERS, APRIL 5

U.S. tax authorities could tap refunds for health insurance penalties

The Internal Revenue Service could tap individual tax returns to collect fines from people who fail to buy health insurance as required under recently enacted healthcare legislation, the U.S. tax commissioner said. Most individuals are required to get health insurance under the new law, or face penalties that would be phased in. By 2016, people without coverage could see fines of 2 percent of their income. Under the new law, the IRS cannot seize assets or levy fines, so IRS Commissioner Douglas Shulman said refunds were the most obvious option to collect penalties. Learn more

(VI) EXCHANGES AND TRADING PRACTICES

US | REUTERS, APRIL 6

U.S. SEC eyes IDs for high frequency traders

U.S. securities regulators are considering a plan that would require high frequency traders to reveal who they are and disclose their trades to the Securities and Exchange Commission, the agency said. The SEC can force large, non-broker firms such as proprietary traders and hedge funds to use an identification number when trading, giving the regulator information about their executions and their effect on the wider market.

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 21

The proposal, to be considered at an April 14 meeting, comes as the SEC examines whether additional rules are needed to curb fast traders, or firms that use sophisticated algorithms to buy and sell stock in a fraction of a second. Learn more

EU | REUTERS, APRIL 7

Rapid-fire trading poses little risk - exchange CEOs

Ultra-high-speed trading boosts market liquidity and poses little risk to the financial system, say bosses of European exchanges keen to defend the practice against charges of opacity. Britain's Financial Services Authority recently raised the concern that markets could be thrown into turmoil in the event of any sudden withdrawal by such traders, who account for 30-50 percent of European equity market volumes and 60-70 percent in the United States. Mark Hemsley, CEO of electronic trading platform BATS Europe, said at the Reuters Global Exchanges and Trading Summit that there was little evidence of such a threat. He said market makers provided liquidity at crisis peaks in 2008 and 2009, when bond and derivatives markets dried up. Alasdair Haynes, CEO of chi-X Europe said concerns raised by regulators and other observers over risks in so-called sponsored access, where a high-frequency trader uses a broker's direct access to a market but where the trader's risk controls may be different or lacking, were unfounded in Europe.

US | REUTERS, APRIL 5

Banning co-location would not end access questions – U.S. regulatory official

Banning traders from placing their servers close to an exchange's trading system would not solve questions concerning unfair advantage, a top U.S. securities regulator said on Monday. Regulators are examining the structure of U.S. equity markets, including "co-location," or allowing brokers and trading firms to rent space next to an exchange in order to gain quicker access to the markets. Securities and Exchange Commission Commissioner Luis Aguilar told a Reuters Summit that the examination was appropriate, but said banning co-location could just force traders to place their servers in “the next building or the building after that."

SINGAPORE | STRAITS TIMES, APRIL 2

SGX to guarantee for some trades

The Singapore Exchange (SGX) will guarantee trades at its derivatives division and the Central Depository (CDP), which provides clearing and other services for SGX-traded securities, the Straits Times said. It said the SGX would provide up to $90.5 million of default insurance to the Singapore Exchange Derivatives Clearing (SGX-DC) and up to $25 million to the CDP. The SGX-DC is the central counterparty and clearing house for derivatives.

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(VII) FUNDS MANAGEMENT

US | REUTERS, APRIL 6

Geithner urges EU to not discriminate against U.S. funds

U.S. Treasury Secretary Timothy Geithner has urged his counterparts in key European capitals to prevent Europe from discriminating against U.S. fund managers in the course of setting new rules for hedge funds and private equity investors. Geither wrote to his counterparts in France, Germany, Spain and Britain and called for a revision in proposed hedge fund rules to ensure that non-EU funds and fund managers had the same access to EU markets as EU firms. Geithner said the Obama administration was working on strengthening regulation and oversight of hedge funds as part of its financial regulatory overhaul and said there was no attempt in U.S. efforts to discriminate in rule-making by national origin. Learn more

SOUTH KOREA | JOINS.COM, APRIL 1

South Korean regulator to weed out low-value funds - report

South Korea’s Financial Services Commission intends to weed out low-value funds from an overcrowded market, Joins.com reported. It said the Financial Services Commission Vice Chairman Kwon Hyouk-se told a news conference that too many small-scale funds created investor confusion. Kwon was cited as saying 1,837 small-scale funds, about 20 percent of all funds, would be subject to liquidation, and the definition of a small-scal fund would be lowered from a balance limit of 10 billion won ($8.8 million) to 5 billion won.

(VIII) CURRENCY

CHINA/US | REUTERS, APRIL 8

Geithner, China’s vice premier meet amid report of yaun move

U.S. Treasury Secretary Timothy Geithner, facing pressure from Congress to name China a currency manipulator, met Chinese Vice Premier Wang Qishan in Beijing but there was no word on whether they discussed a possible yuan revaluation. The Treasury Department said in a brief statement that the two had exchanged views at their meeting in Beijing on economic relations, and it did not mention currency. The meeting follows Geithner's announcement last week that he was delaying a hotly awaited April 15 report to Congress on whether China or any other country is manipulating its currency for an unfair trade advantage. The New York Times reported that Beijing was very close to announcing a "small but immediate" revaluation of the yuan and would then let the currency fluctuate more widely. Learn more

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 23

CHINA | REUTERS, APRIL 6

China keeps annual bank forex quotas unchanged - sources

China's foreign exchange regulator has kept short-term currency quotas for Chinese banks and other financial institutions unchanged for the year that started on April 1, regulatory sources told Reuters. The move contrasts with a quota increase the previous year and follows a rise in Chinese corporate borrowing in foreign exchange, and a rise in capital inflows into China since late last year. The State Administration of Foreign Exchange (SAFE) set the quotas at $32.9 billion for the year that will end on March 31 next year. In the previous year, it increased the quotas by 12 percent to help China's financial sector grapple with the global financial crisis. Several bankers confirmed that they had received SAFE notices informing them that their short-term quotas would remain unchanged barring “special reasons.”

CHINA | INDUSTRY UPDATES, APRIL 6

China central bank urges more cross-border yuan settlement

China’s central bank called for wider cross-border settlement of trade in the yuan currency to more cities and foreign areas, at the “appropriate time,” China Daily’s Industry Updates reported. The report said the central bank did not detail what would constitute appropriate conditions. It said the government was considering expanding cross-border yuan settlement from commodities into services.

(IX) TRADE & CROSS BORDER

US/BRAZIL | REUTERS, APRIL 6

US/Brazil find fix to WTO cotton dispute

The United States headed off a move by Brazil to impose penalties on a wide range of U.S. goods by offering concessions on an export loan guarantee program and said it would try to negotiate an end to a long-standing trade spat over cotton. The last-minute proposal came as Brazil was set to impose tariffs and lift protections on $829 million in U.S. goods -- its right after a 2009 World Trade Organization ruling against U.S. cotton subsidies. That ruling gave Brazil the right to "cross-retaliate" by lifting patent protections on pharmaceuticals, chemicals, and intellectual property rights on film and music. Under the plan, the United States pledged to make some short-term tweaks to its export credit guarantees and give Brazil about $147.3 million per year in damages for a "technical assistance" fund. Brazil will give the U.S. Congress more time to figure out a longer-term solution to programs ruled illegal by the WTO. Learn more

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 24

RUSSIA | FINANCIAL TIMES, APRIL 5

Banks criticise Moscow restrictions on foreign listings - report

Western bankers have voiced concerns over measures adopted by the Russian market regulator that limits Russian companies to listing no more than 25 percent of their equity abroad, the Financial Times reported. The newspaper said the banks warned that the ruling by the Federal Financial Markets Service would drive businesses to re-register abroad.

(X) COMMODITIES & ENERGY

GLOBAL | REUTERS, APRIL 7

US to host major economies meeting on climate

The United States will host a meeting of major economies on April 18-19 in Washington to advance talks on a global deal to fight climate change, the top U.S. climate negotiator said. Todd Stern told Reuters he hoped U.N. climate talks in 2010 would lead to agreements on six outstanding issues, including financing for poor countries' pollution-control efforts, but he said it was unclear whether a legally binding deal to reduce greenhouse gas emissions would be reached this year. The Major Economies Forum, which helped nudge big emitters to support a goal of limiting global warming to less than 3.6 degrees Fahrenheit (2 degrees Celsius) above pre-industrial levels, was not intended to be a negotiating forum to replace the United Nations, Stern said, in a reiteration of U.S. policy. Analysts have speculated the forum or other groups would take on a greater role this year in climate negotiations after chaotic U.N. talks in Copenhagen in December ended without a legally binding pact.

VENEZUELA | REUTERS, APRIL 2

PDVSA, Russia to spend up to $80 million in Venezuela oil belt

Russian companies and Venezuela will invest between $60 million and $80 million this year in the Junin 6 block in Venezuela's vast Orinoco heavy crude belt, a senior Russian oil executive said. Venezuela's state-run PDVSA and a Russian consortium agreed in February to set up a joint venture to tap the Junin 6 field in the oil belt, which the government in Caracas says holds the largest hydrocarbon reserves in the world. It hopes the block, which will require the investment of some $20 billion over the next four decades, will produce 450,000 barrels per day -- or nearly a fifth of the OPEC member nation's current output. Vladimir Bogdanov, head of Surgutneftegas, Russia's fourth-largest oil producer and one of five Russian companies in the consortium, told reporters the Russian firms would start exploration in the area in 2011. And he added that the first $600 million tranche of an agreed $1 billion signing fee had been paid to Venezuela by the Russians.

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 25

US | REUTERS, APRIL 6

U.S. climate bill sets oil "rack" transport tax -source

Details of an oil industry tax are taking shape in Congress as part of an upcoming U.S. climate control bill, sparking a spirited lobbying campaign this week over how the revenues from that tax would be used. A Senate source familiar with the draft legislation told Reuters that the new fee will be assessed “at the terminal rack," -- where refined oil products await shipment to retail gasoline stations and other end points. But the source added that no final decisions had yet been made on whether revenues from the tax would be deposited into the Highway Trust Fund and whether they would be earmarked for specific "green" projects or road and bridge repairs that the highway fund normally handles. The new oil-industry tax, aimed at encouraging better fuel efficiency in the transportation sector, would be part of a compromise global warming bill being written in the Senate that could be unveiled by the end of April.

US/CANADA | REUTERS, APRIL 1

U.S., Canada raise car fuel efficiency, set CO2 standard

The United States finalized its first greenhouse gas emissions rules on automobiles and raised fuel efficiency standards for the first time since the 1970s, measures Canada also imposed. The U.S. rules will first apply to 2012 model cars. They are part of President Barack Obama's goal to cut emissions of greenhouse gases by about 17 percent under 2005 levels by the year 2020. Obama wants Congress to pass a long-delayed climate bill, but to push it along, he has also set in motion steps for the Environmental Protection Agency to begin regulating emissions from cars and large polluters like power plants. The efficiency rules require that cars and trucks get on average 35.5 miles per gallon (15 kilometers per liter) by 2016, up 42 percent from current rules, of just under 25 miles per gallon. The EPA spelled out for the first time that average vehicle emissions will be limited to 250 grams of carbon dioxide per mile by 2016, down from 295 grams in 2012. Canada's government also finalized fuel efficiency rules. Canadian Environment Minister Jim Prentice said Canada and the United States "will effectively share common standards" for limiting vehicle greenhouse gas emissions. The U.S. program will add about $52 billion in vehicle costs, but benefits should hit $240 billion, in lower fuel bills and reduced health care costs related to pollution, the EPA said. Learn more Learn more

KAZAKHSTAN | REUTERS, APRIL 6

Kazakhs threatens to deport Karachaganak employees

Kazakhstan accused the giant Karachaganak oil consortium of violating immigration laws, stepping up pressure on the BG and ENI-led group as the country seeks a stake in the field. The prosecutor general's office said it had charged seven and was checking some 270 foreign employees of the consortium, which also includes Russia's LUKOIL and U.S. major Chevron. A final decision on deportation is up to the court, a representative of the prosecutor’s office said. Investors say the dispute is similar to previous rows between foreign majors and the increasingly assertive governments of resource-rich Kazakhstan and neighbouring Russia. Kazakhstan has repeatedly managed to win better terms in production sharing deals with foreign majors, including the giant ENI-led Kashagan oil field, after months of wrangling over ecology and development costs.

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 26

EU | REUTERS, APRIL 7

Vale accuses EU steelmakers of anti-competitive actions

Brazil's giant iron ore producer Vale has launched a blistering counter-attack on European steelmakers, accusing them of coordinating their approach to ore negotiations in a manner that would raise issues under European competition law. The accusations are contained in a letter to the European Commission. Vale strongly rejects allegations from the steelmakers it has broken European law in discussions about future supply agreements by exchanging information or pricing strategies with any competitor. All major producers insist the market is ferociously competitive. Learn more

INDONESIA | REUTERS, APRIL 6

Indonesia cocoa exporters seek to rework contracts

Indonesian cocoa exporters are seeking to renegotiate supply pacts with overseas buyers after the government slapped an export tax on the commodity in April, the Indonesia Cocoa Association said. Exporters were trying to delay shipments for April to avoid losses, said Halim Razak, chairman of the Association, known as Askindo. The association had asked the government to delay the export tax by six months, he added. Cocoa trading in Makassar, home of the biggest port in the main cocoa growing area of Sulawesi island, was slow this week despite the main harvest being already under way as the new tax, aimed at boosting domestic grinding, put off exporters from buying beans.

(XI) ISLAMIC FINANCE

DUBAI | REUTERS, APRIL 7

Dubai's Limitless target of first tribunal claim

A special tribunal set up by Dubai to handle debt claims against the subsidiaries of its Dubai World holding company has received its first case. The filing may set the tone for other potential claims stemming from Dubai World’s decision last November to delay repayment of $26 billion in debt linked to the companyand its property units Limitless and Nakheel, A claim was filed against Limitless LLC on April 5 by a former employee of the company and a notice has been served to the company, a spokesman for the special tribunal's registrar's office said. Additional details will be provided after Limitless confirms receipt of the notice. Dubai set up a special tribunal in December made up of three international judges to oversee the restructuring of Dubai World debt and settle any disputes that could arise from it. The tribunal has received numerous inquiries from law firms and creditors seeking information on procedures, said a source familiar with the matter.

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 27

MALAYSIA | REUTERS, APRIL 6

Malaysia to likely issue U.S. dollar Islamic bond

Malaysian Prime Minister Najib Razak said that Malaysia will likely tap global bond markets by offering a U.S. dollar Islamic bond to test investor appetite for its assets. Najib said at a dinner hosted by the Singapore Foreign Correspondents Association that Malaysia did not "actually need" the money, but "it is good for Malaysia" to find a benchmark on how the markets rate its creditworthiness.

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 28

INDUSTRIAL POLICY

CHINA | SOUTH CHINA MORNING POST, APRIL 3

Chinese cabinet approves bank funding requests, points to Hong Kong – report

China’s State Council has approved fund-raising requests from major banks for 2010 and encouraged them to seek financing from the Hong Kong market, the South China Morning Post reported. It said the cabinet instructed the banks to raise some money through the domestic market, from existing shareholders, and “in innovative ways." The cabinet also encouraged more use of the “H-share” Hong Kong market to raise money, the newspaper reported, citing China’s National Business Daily.

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 29

TELECOMS & INTERNET

US | REUTERS, APRIL 6

US court vacates FCC ruling on Comcast Web traffic

U.S. appeals court dealt a setback to the Federal Communications Commission's authority to oversee the Internet, tossing out an agency ruling that forced Comcast Corp to change the way it managed its broadband network. The decision issued will likely have major implications for future regulation of Internet access in the United States and consequences for the FCC, which last month unveiled an ambitious plan to upgrade Internet access for all Americans and shift spectrum from television broadcasters to support the huge demand for smartphones and other wireless devices. The FCC had voted in 2008 to uphold a complaint against Comcast and required the company to cease blocking peer-to-peer applications, which are commonly used to distribute large files like TV shows and movies. The U.S. Court of Appeals for the District of Columbia Circuit said that the FCC had failed to show that it had the authority to impose such restrictions, which were put in place after customers had complained that Comcast was interfering with peer-to-peer applications, which permit users to share files. Learn more

CHINA | REUTERS, APRIL 6

China cyber-spies target India, Dalai Lama - report

A cyber-espionage group based in southwest China stole documents from the Indian Defence Ministry and emails from the Dalai Lama's office, Canadian researchers said in a report. The cyber-spies used popular online services, including Twitter, Google Groups and Yahoo Mail, to hack into computers, ultimately directing them to communicate with command and control servers in China. The report, entitled "Shadows in the Cloud," said the spy network was likely run by individuals with connections to the Chinese criminal underworld. Information might have been passed to branches of the Chinese government, it added. There was no “hard evidence” linking the attacks to the Chinese government, said Nart Villeneuve, who, like the other authors of the report, is a researcher at the University of Toronto's Munk School of Global Affairs. (Reuters, April 6) Learn more

UK | REUTERS, APRIL 7

UK delays broadband tax

Britain's Labour government has delayed plans for a new tax to fund broadband access following negotiations to pass budget laws before parliament is dissolved ahead of the May election, the Treasury said. The broadband tax of 50 pence per month on telephone landlines,

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 30

which would yield 175 million pounds a year from 2011, was intended to enable 90 percent of Britons to access next generation, high-speed broadband by 2017. If Labour holds on to power in May elections, the broadband tax will be reintroduced in a second finance bill.

INDIA | REUTERS, APRIL 2

Billion-dollar bids expected at India spectrum auction

Nine firms will compete in a widely watched airwaves auction in India starting April 9 that would pave way for the introduction of high-speed third-generation mobile services in the world's fastest-growing mobile market. In what could be one of the world's biggest such auctions over the past few years, the Indian government hopes to net revenues of nearly $8 billion from 3G and a near simultaneous auction of broadband wireless access (BWA) spectrum. The 3G auction starts from April 9 and two days after it closes, the BWA spectrum auction will begin. India's top six private telecoms operators are bidding for 3G spectrum across all 22 zones, while three others including Etisalat's Indian telecoms venture will bid in select zones. Due to limited number of slots for 3G -- three each in most of India's 22 telecoms zones and four in some -- and high competition for the scarce spectrum, analysts expect each winning bid to be more than $1 billion for a pan-India licence, or even touch $2 billion, compared with a base price of $780 million. Learn more

JAPAN | DATAMONITOR NEWS AND COMMENT, APRIL 1

PayPal halts personal payments in Japan

PayPal said its customers in Japan could no longer to make personal payments to individuals using the company's 'send money' service, due to new Japanese licensing requirements for payment providers, Datamonitor News and Comment reported. It said users outside Japan can still send money to Japanese PayPal members, and Japanese users can use Paypal for commercial transactions. Earlier this year Paypal suspended personal payments in India after the central bank said that the company needed authorization operate a cross-border money transfer service under local laws. Paypal in March announced an Asian expansion that would include doubling the amount of jobs in the region, to 2,000.

RUSSIA | ITAR-TASS, APRIL 1

Russian central bank to control e-money soon - report

Internet-based money services will be controlled by Russia’s Central Bank, Russian Finance Minister Alexey Kudrin said, according to an ITAR-Tass news agency report. The agency said Kudrin, commenting on proposed national payment-system legislation, said the measure will regulate Web payment transactions as “electronic money.”

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 31

FRANCE | REUTERS, APRIL 6

France passes bill to open up online gambling market

France's parliament passed a bill to end a state monopoly on online gambling and allow privately owned websites to offer bets on poker, soccer and horse racing. France has been under pressure from the European Union and from private gaming firms to open up to competition a market worth billions of euros. The bill is expected to be in effect by the World Cup in South Africa starting in June. The measure forces operators to seek a permit from a regulator whose role is to check that games meet regulations, hunt down misdemeanours and combat addiction. It will help “dry up” the black market in online gambling, Budget Minister Francois Baroin said.

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 32

INTELLECTUAL PROPERTY RIGHTS

US/UK | REUTERS, APRIL 7

Google sued by visual artists over book scanning

Google Inc was sued by photographers, illustrators and other visual artists who claim the Web search company is scanning and displaying their work online without paying them. The lawsuit was filed in Manhattan federal court by the American Society of Media Photographers and others who were not permitted to join a $125 million class-action settlement over digitized books, which is pending in the same court. The new lawsuit also seeks class-action status on behalf of photographers and illustrators whose works are contained in books covered by the earlier settlement. McGuire, a partner at the law firm Mishcon de Reya New York LLP, said the suit was seeking “very substantial damages.” Google said it was “fully compliant with international copyright law." Learn more

GLOBAL REGULATORY BRIEFING, APRIL 8, 2010 33

PEOPLE

US | REUTERS, APRIL 1

U.S. Treasury appoints two executives to AIG board

The U.S. Treasury Department tapped former E*Trade Financial chief executive Donald Layton and former Electronic Data Systems chief executive Ronald Rittenmeyer for American International Group's board of directors. Treasury said it exercised its right to appoint directors because AIG failed to pay dividends for four quarters on the AIG preferred stock held by Treasury. The government owns 79.9 percent of AIG after having committed more than $180 billion of taxpayer funds into the company.

VENEZUELA | REUTERS, APRIL 6

Venezuela names new mines and industry minister

The government of Venezuelan President Hugo Chavez named a new minister of mining and basic industries following production and labor problems in the OPEC nation's industrial belt. Venezuela's Official Gazette named veteran union leader and economist Jose Khan as mining minister, replacing another union leader, Rodolfo Sanz, in the post. Khan will oversee the large state-owned steel, aluminum and minerals plants that are strung-out along the Orinoco river in the southern state of Bolivar. The plants, operated by the government's CVG basic industries company, have long struggled with costs, debt and labor problems. Production in many has virtually ground to a halt this year because of electricity shortages. Khan, who was also named as the interim president of CVG, is responsible for developing the mining sector in Venezuela, which has huge and largely undeveloped reserves of minerals including gold and diamonds.

US | WASHINGTON POST, WALL STREET JOURNAL, APRIL 2

U.S. lawmaker bans contact with aide who became exchange lobbyist - report

U.S. Representative Barney Frank, head of the House committee working on an overhaul of financial regulation, banned his staff from having contacts with a committee staffer who joined the Intercontinental Exchange as a lobbyist, the Washington Post reported. It said staff member Peter Roberson joined the electronic trading firm in February after spending nearly three years on the staff of the committee, and that Frank expressed his displeasure in a rare public statement. Roberson will still be able to lobby the Senate, which has not yet passed a regulatory overhaul, the Post said. The Wall Street Journal said ICE said it has acted in accordance with all ethics rules. Learn more

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