Oppenheimer to Pay SEC, EU Financial Tax: Compliance

Oppenheimer Holdings Inc. will pay $20 million to settle U.S. regulatory claims that it improperly sold billions of shares of penny stocks on behalf of customers.
Oppenheimer admitted that it failed to report red flags that its client Gibraltar Global Securities, a Bahamas-based firm, was carrying out the transactions without being registered in the U.S., the Securities and Exchange Commission said in a statement. The firm acknowledged additional sales of penny stocks for a different customer that resulted in about $588,400 in commissions, according to the SEC.

In a statement, Oppenheimer said it was pleased to resolve the claims, which involve activity from “years ago.”

The SEC in April 2013 sued Gibraltar, saying the firm had been operating illegally in the U.S. since 2008. Gibraltar is fighting the claims in Manhattan federal court.

The settlements made public Tuesday call for Oppenheimer to pay $10 million to settle the SEC case and another $10 million to resolve related violations with the Treasury Department.

Jennifer Shasky Calvery, director of the Treasury Department’s Financial Crimes Enforcement Network, said Oppenheimer faced stiffer penalties because it was a repeat offender. Oppenheimer paid $2.8 million in 2005 over anti-money laundering violations.

The SEC said its investigation is continuing.

Compliance Policy

Europe Financial Transaction Tax Gets New Push From 10 Countries

A group of 10 euro-area countries renewed their joint effort to implement a tax on financial transactions after talks collapsed last month.

Finance ministers from Austria, Belgium, Estonia, France, Germany, Italy, Portugal, Slovakia, Slovenia and Spain made a joint statement after meetings in Brussels.

Differences over taxation of derivatives and the cost-efficiency of the tax in smaller countries caused talks to break down late last year. The group, which wants the levy to apply as widely as possible, is now asking the European Commission for technical advice.

Courts

Perry Loses Bid to Toss Ethics Charges as Unconstitutional

Rick Perry failed to persuade a Texas judge to throw out an ethics violation case on claims the state constitution protects a governor’s right to say whatever he wants about his official powers.

Perry, a potential candidate for the 2016 Republican U.S. presidential nomination, may have to face a trial on two counts of abusing his authority. Perry allegedly threatened to veto funding for an ethics task force if the county prosecutor running it didn’t resign following a drunken-driving conviction.

Texas state court Judge Bert Richardson, a Republican appointed to oversee the former governor’s case, denied on Tuesday Perry’s bid to dismiss one of the counts and, while he agreed that the second count was flawed, said the state may file an amended indictment “to cure any such defect.” He rejected Perry’s request to dismiss the count.

Richardson also said Perry can’t challenge the constitutionality of the law he’s charged under until after he’s tried.

Perry immediately filed a notice of appeal after the decision.

“Continued prosecution of Governor Perry is an outrage and sets a dangerous precedent,” Tony Buzbee, Perry’s attorney, said in an e-mailed statement. “America’s commitment to the Constitution and the rule of law is at stake in this case, which is why we will immediately appeal.”

Perry, 64, Texas’s longest-serving governor, left office this month.

Perry is accused of wanting to remove Travis County District Attorney Rosemary Lehmberg, a Democrat, and slash funding for the task force under her control because it was probing a cancer-research funding program that benefited some of his political donors. He denies the claim.

The case is Texas v. Perry, D1DC14-100139, 390th Judicial District Court of Travis County, Texas (Austin).

Saxo Faces Lawsuits for Repricing Franc Trades Retroactively

Saxo Bank A/S says it’s bracing itself for lawsuits from some clients who are unhappy with its efforts to have them cover losses on their Swiss franc accounts after the bank repriced trades retroactively.

The Danish bank set a Jan. 23 deadline for clients to respond to its estimates of how much they’d lost trading francs using borrowed funds. Saxo said talks with institutional and retail customers will probably take “a couple of months.” The bank estimated its own losses may be as high as $107 million.

Steen Blaafalk, Saxo’s chief financial officer and head of risk management, said Jan. 26 in a phone interview that legal challenges are “not unlikely.”

Since the Swiss National Bank’s shock decision on Jan. 15 to abandon its euro peg, Saxo has raised its margin requirements not only on the franc but also on most major currencies in an effort to reflect what Blaafalk said is a return to “extreme volatility” across markets.

The bank confirmed Tuesday in Denmark that it repriced franc trades on Jan. 15, citing “very limited liquidity” at the time the trades were executed. Saxo told clients at 11 p.m. Copenhagen time on that day it was doing so, according to spokesman Kasper Elbjoern.

Censeo Asset Management, based in Vienna, said in a press release Tuesday that it “can’t recognize the lawfulness of this measure” and it will help its clients challenge Saxo’s repricing if a review shows the action is “questionable under Austrian law.” The company offered clients a Saxo-brokered franc product.

Saxo is now urging clients to gird for more market disruptions as bond purchases by the European Central Bank distort asset prices and as Greece prepares to renegotiate its bailout terms.

To contact the reporter on this story: Carla Main in New Jersey atcmain2@bloomberg.net