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Mar 13, 2013

CFTC looking into London gold, silver price setting: GATA | THE GATA DISPETCH MARCH 13, 2013.

CFTC looking into London gold, silver price setting

Submitted by cpowell on 03:36PM ET Wednesday, March 13, 2013. Section: Daily Dispatches
By Katy Burne
The Wall Street Journal
Thursday, March 13, 2013
The U.S. Commodity Futures Trading Commission is scrutinizing whether the daily setting of gold and silver prices in London is open to manipulation, according to people familiar with the situation.
No formal investigation has been opened, the people said. The CFTC is examining various aspects of the price settings, including whether they are sufficiently transparent, they said.
Gold prices are set twice daily by five banks via teleconference, while three banks set silver prices. These so-called fixings are then used to determine spot prices worldwide, affecting everything from jewelry to sales from mining companies to refineries. The prices also help determine the value of derivative securities tied to the metals.
Global interest-rate benchmarks also are determined using a bank price-setting process. An investigation by regulators worldwide into one of those benchmarks, the London interbank offered rate, known as Libor, uncovered alleged manipulation and triggered multibillion-dollar fines against three banks. 
 The London gold market pricing process dates from 1919, and now has twice-daily conference calls involving units of five banks: Barclays, Deutsche Bank AG, HSBC Holdings, Bank of Nova Scotia, and Societe Generale.
The silver setting, dating from 1897, involves Bank of Nova Scotia, Deutsche Bank, and HSBC.
Spokespeople for Barclays, HSBC, and Deutsche Bank had no immediate comment. Representatives from the other two banks couldn't immediately be reached.
The fixings are "not arbitrary. It's very much done on a demand-supply basis until a price is arrived at," said a spokesman for the London Bullion Market Association, the trade organization that sets the standards for the quality of gold and silver traded in the London market, but doesn't run the fixings. "It's fully transparent; it's nothing like Libor," he said.
The scandal involving Libor, a rate used to price everything from corporate loans to home mortgages, saw traders allegedly provide manipulated data to the industry organization that publishes the benchmark rate in an effort to create profitable trades.
More than a dozen financial firms are under investigation in the rate probe, and three banks, Barclays, Royal Bank of Scotland Group, and UBS AG, have settled for a combined $2.5 billion. Regulators are pushing for greater transparency in how benchmark interest rates are set.
CFTC Chairman Gary Gensler is co-chairman of a task force on financial-market benchmarks within the International Organization of Securities Commissions along with Martin Wheatley, managing director at the U.K. Financial Services Authority. The group plans to issue a new set of guidelines for benchmarks this spring. In January, it published an initial set of comments on financial benchmarks.

* * *

Banks Bow to New York on Clawbacks: The Wall Street Journal Markets Alert

Three more top banks, including Citigroup Inc., C +0.04% will broaden their clawback policies to cover more executives, increase disclosures or add potential triggers.
The moves increase to six the number of leading financial companies that have bowed to pressure from the New York City's Comptroller's Office.
Comptroller John C. Liu also appears to have broken new ground, with Capital One Financial Corp. COF +0.05% agreeing to make public the total dollar amount of pay it claws back.
Agence France-Presse/Getty Images
Capital One will become the first bank to make public the amount of pay it claws back from executives.
The sixth-largest U.S. bank will disclose how much it recouped from errant workers, so long as the event that triggered the collection has been publicly disclosed in regulatory filings, a spokesman for Mr. Liu said. It is believed to be the first company to agree to disclose clawback dollar amounts.

The agreements, which Mr. Liu's office plans to announce on Thursday, come after four months of negotiations. As comptroller, Mr. Liu oversees New York City's pension funds, which are major shareholders of the banks.

In addition to Capital One and Citigroup, Wells Fargo WFC +0.30% & Co. also agreed to broaden clawback policies to cover misconduct that causes financial or reputational harm, although the Citi and Wells changes are less expansive than Capital One's, the spokesman said.

The new policies also cover supervisors, similar to agreements New York City's pensions struck last year with Goldman Sachs Group Inc., GS +0.04% Morgan Stanley MS +0.49% and J.P. Morgan Chase JPM -0.24% & Co.

Clawbacks have taken on added scrutiny nearly a year since J.P. Morgan took a $6.2 billion trading hit in what has become known as the "London whale" blunder.

J.P. Morgan clawed back two years of total annual compensation, including restricted stock, and canceled options grants, from three London-based managers who had direct responsibility for the trading portfolio at the heart of the losses. Ina Drew, the executive who ran the Chief Investment Office where the losses occurred, volunteered to return her pay to the maximum amount allowed by the bank.

The bank also has recouped other employee pay but hasn't disclosed details or the dollar amounts for any clawbacks.
Before the "London whale" there weren't many known cases of clawbacks in the financial sector. The Dodd-Frank financial law broadened the rules instituted in the 2002 Sarbanes-Oxley Act, which gave companies the power to recoup pay from top executives after a financial restatement or certain misconduct.
In February 2012, UBS AG UBSN.VX -0.33% clawed back 50% of share-based bonuses awarded in 2011 to investment bankers whose bonuses exceeded $2 million.

That followed a trading scandal that cost $2.3 billion and pushed UBS to a $1.3 billion loss for 2011.
New York City's pensions hold 1.6 million shares of Capital One, 7.4 million shares of Citi and 11.7 million shares of Wells Fargo, worth $87.4 million, $347.5 million and $430 million, respectively, as of Wednesday's market close.

"The new policies will give boards the power to hold executives financially accountable for costly misconduct, including misconduct by those they supervise," Mr. Liu said in a statement.
Spokesmen for Capital One and Citi declined to comment.

A Wells Fargo spokeswoman said the comptroller's proposal was "consistent with our thinking on the subject, and we appreciate the productive dialogue we had with our shareholder."

Mr. Liu's office has been pressing banks to disclose when and how much they claw back. Capital One is believed to be the first company to specifically agree to do so, he said. Citi and Wells Fargo agreed to consider disclosure on a case-by-case basis.

Capital One's previous clawback provisions covered only its top executive officers and triggered only in the event of a financial restatement or willful misconduct. Its new policy covers conduct of the firm's 12 executive officers and holds them accountable for events that occur under their chain of command.

Citi's revised clawback policy recoups pay where executives are responsible for material financial or reputational harm, either through their own actions or in failing to supervise others.

Wells Fargo's revised policy takes back unpaid compensation awards in the event of misconduct, material error, failure to supervise or in the event the company or an individual executive's business group has a material downturn in financial performance or failure of risk management.

Write to Liz Moyer at

The New Pope: Bergoglio of Argentina: NYT | Global Update March 13, 2013

The New York Times International Herald Tribune
March 13, 2013
Compiled 20:47 GMT

Global Update


The New Pope: Bergoglio of Argentina

In selecting Jorge Mario Bergoglio, 76, the first non-European pontiff in more than 1,000 years, the cardinals sent a strong message that the church's future lies in the Southern Hemisphere.
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The official papal Twitter feed has become active again; the new pope led a prayer for his predecessor.
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In 1900, two-thirds of the world's Catholics lived in Europe. Today only 20 percent do.


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Google Concedes That Drive-by Prying Violated Privacy

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Having None of Having It All : NYT | Opinion Today March 13, 2013

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DealBook P.M. Edition March 13, 2013.: Witness List Set for Senate Hearing on JPMorgan Trading Loss

Wednesday, March 13, 2013
Witness List Set for Senate Hearing on JPMorgan Trading Loss Doug Braunstein, who was the bank's chief financial officer at the time of the losses, is scheduled to appear, as is Ina Drew. Jamie Dimon, the bank's chief, will not testify.
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