Basel III Interim Results.
On March 6th, the Basel Committee published the results of its Basel III monitoring exercise. A total of 227 banks participated in the current study, 102 "Group 1 banks," (large internationally active banks) and 125 "Group 2 banks," (which are representative of all other banks.) The study found that as of June 30, 2013, shortfalls in the risk-based capital of large internationally active banks generally continue to shrink while the capital shortfall for Group 2 banks increased. BIS Press Release.
On March 6th, Forbes discussed the Second Circuit's opinion in SEC v. Contorinis, where a divided panel held that a securities fraud tipper can be required to disgorge all gains obtained by his tippees, even without direct economic benefit to the tipper. Fortune notes that the opinion blurs the distinction between the disgorgement of ill-gotten gain and punitive penalties. It also makes more uncertain the remedies the SEC may seek in any future enforcement action. Blurred Lines.
Supreme Court Hears Fraud on the Market Arguments.
On March 5th, Reuters summarized the oral arguments made before the U.S. Supreme Court in Halliburton v. Erica P. John Fund, where the future of the fraud-on-the-market presumption in class action securities fraud cases is being debated. A number of key Justices appeared to support a compromise position that would not overrule the presumption but would raise plaintiffs' pleading standard for such cases. Oral Arguments.
The Crime-Fraud Exception.
On March 4th, DealBook highlighted what is becoming a growing thorn to regulators investigating financial fraud, the attorney-client privilege and attorney work product doctrine, and the regulators' efforts to invoke the crime-fraud exception to void those protections. Voidable Protections.
The 411 on KYC.
On March 4th, the Society for Worldwide Interbank Financial Telecommunication ("SWIFT") announced it has signed agreements with a group of major banks to jointly develop and use SWIFT's know your customer registry, a centralized utility for the collection and distribution of standard information required by banks as part of their due diligence processes. SWIFT Press Release.