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West Palm Beach (HedgeCo.net) – G8 Finance Ministers announced their endorsement of a global regulatory framework for financial institutions worldwide, "We agreed to create a coherent framework which builds on work done by the IMF, World Bank, OECD, FSB, FATF, and other international organizations, to strengthen the global market system." the G8 said in a statement on Saturday.
"To ensure effectiveness, we will make every effort to pursue maximum country participation and swift and resolute implementation. We have agreed on the objectives of a strategy, "the Lecce Framework", to create a comprehensive framework, building on existing initiatives, to identify and fill regulatory gaps and foster the broad international consensus needed for rapid implementation."
The Lecce Framework recognizes that there is a wide range of instruments, both existing and under development, which have a common thread related to propriety, integrity and transparency and classifies them into five categories: corporate governance, market integrity, financial regulation and supervision, tax cooperation, and transparency of macroeconomic policy and data.
Specific issues covered include, inter alia, executive compensation, regulation of systemically important institutions, credit rating agencies, accounting standards, the cross-border exchange of information, bribery, tax havens, non-cooperative jurisdictions, money laundering and the financing of terrorism, and the quality and dissemination of economic and financial data. International institutions and fora have already developed a significant body of work addressing a number of important issues in these areas, but, in many cases, the initiatives suffer from insufficient country participation and/or commitment, the G8 said.
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The battered insurance giant AIG returns to Capitol Hill Wednesday facing another frosty reception in Congress – where three AIG trustees appointed by the U.S. government will make their public debut amid growing skepticism over their role at the company.
House Oversight Committee Chairman Edolphus Towns (D-N.Y.) is questioning whether the Federal Reserve Bank of New York – which installed the handpicked trustees in January – is doing enough to protect taxpayers footing the bill for the $182.5 billion bailout.
And POLITICO has learned that one of those trustees has another role – as chairwoman of a Bermuda-based firm that administers hedge funds based in the Cayman Islands and other global tax havens.
AFP – The United States and Switzerland will begin negotiations to amend their bilateral income tax treaty to provide for improved transparency, the US Treasury Department said Monday.
The announcement came following Group of 20 pledges last week to clean up tax havens and fight tax fraud and as bilateral relations have been strained by a massive tax fraud case involving Swiss banking giant UBS.
The negotiations to amend the 1996 treaty are expected to begin April 28 in Berne, Switzerland, the Treasury Department said in a statement.
Dow Jones Deutschland – Leaders from the Group of 20 largest economies have yet to agree on how to deal with tax havens, including whether to spell out sanctions on financial centers that don’t share information.
An official at a G20 delegation said there will be "strong language" on tax havens, making it clear to them they must share information or face the consequences.
However, it’s not yet clear if they will threaten specific sanctions. Read Complete Article
Breitbart.com – Banking giant UBS Wednesday defied pressure to name about 50,000 Americans holding secret bank accounts in Switzerland as the nation’s financial culture came under a withering fire.
US senators accused bankers at crisis-wracked UBS of helping wealthy Americans to flout US tax law through a variety of underhand methods down to encrypted laptops and lies to US customs officers.
But while acknowledging wrongdoing under a deal last month between UBS and US prosecutors, a top executive with Switzerland’s biggest bank said it could provide no more than 250-300 names of US account holders already handed over.
Mark Branson, the Zurich-based chief financial officer of UBS Global Wealth Management and Swiss Bank, said the group was already shutting down US-owned securities accounts and paying a 780-million-dollar fine to the US government.
"We believe that UBS has now complied with the summons to the fullest extent possible without submitting its employees to criminal prosecution in Switzerland," he told a hearing of the Senate investigations subcommittee.
Grilled by the panel’s Democratic chairman, Carl Levin, Branson said up to 48,000 accounts were held in Switzerland by US clients but that Swiss law precluded UBS from divulging any more names.
But Levin, accusing the British-born banker of being "needlessly evasive," said UBS had made a "declaration of war… against honest, hard-working taxpayers" through its illegal practices in the United States.
Broadening the fight to take in the Swiss government’s jealous protection of its banking secrecy law, the senator said: "We’re determined to fight back and end the abuses inflicted on us by those tax havens."
Under its settlement with the US Justice Department, UBS last month admitted to tax fraud by inviting rich US clients to open accounts in Switzerland and so evade declaring their income to the Internal Revenue Service.
Under its interpretation of the two nations’ tax treaty, UBS said it could only cough up the identities of 250 to 300 US account holders.
New York (HedgeCo.Net) – A federal judge has set a July 13 hearing for UBS, in which they may be forced to disclose names associated with 52,000 secret Swiss bank accounts holding more than $14.8 billion in assets. UBS continues to assert that by providing these names, they are compromising overseas privacy laws as well as the reputation of the bank.
”Such violations would expose these employees to substantial prison terms, as well as fines, penalties and other sanctions,” UBS said in a court filing last week. “There is simply no reason to have, nor equity in having, such an expedited process here.”
UBS is feeling the heat from a surge of international pressure to crack down on secret tax havens sought by the wealthy. Estimating the U.S. loses $100 billion a year from offshore tax abuse, President Obama is at the forefront of the campaign to get tough on tax evasion.
While his Stop Tax Haven Abuse Act was aimed at secret financial centers in the Caribbean, Switzerland has long been regarded as a popular place to stash assets without the watchful eye of Uncle Sam to worry about. Switzerland does not believe that tax evasion is a crime.
UBS has already agreed to pay the U.S. $780 million in damages, with $200 million of that going to settle charges brought on by the Securities and Exchange Commission. They have also agreed to exit the U.S. cross-border banking business and close the existing offshore accounts of their American clients.
Offshore banking has also been cast in a bad light thanks to the recent Antigua-based scandal masterminded by Texas financier Robert Allen Stanford. Stanford’s companies, including Stanford International Bank, are estimated to make up about 10% of the country’s economy with billions in deposits coming from all over the world.
In 1999, the U.S. blacklisted Antigua, accusing the country of lax regulation and subpar anti-money laundering laws. The sanctions were lifted in 2001. Still, deposits in the region continued to soar, and the country insists that their regulatory system is strong. Antigua is currently conducting their own investigation in the Stanford matters.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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Economic Times – European leaders meeting in Berlin on Sunday backed oversight of the world?s financial markets and products, including hedge funds, and urged that sanctions be drawn up to punish tax havens.
A copy of the “chair’s summary” from a summit hosted by Chancellor Angela Merkel and seen by Reuters describes the situation in financial markets as “fraught” and says structural reforms and a focus on public spending are needed to emerge stronger from the global crisis.
Independent – European leaders backed major reform of hedge funds yesterday as part of structural changes to help the world’s financial institutions emerge stronger from the global economic crisis.
Short-selling by the secretive hedge fund industry — selling borrowed stock in the anticipation that the prices will fall — was blamed by some politicians for exacerbating the banking crisis and economic meltdown.
A copy of the summary from the summit hosted by German Chancellor Angela Merkel in Berlin said banks should bring in reforms to ensure they build up a buffer of resources in good times and called for sanctions against tax havens.
Boston Globe – The leaders of Germany, Britain, France, and Italy yesterday said that the resources of the International Monetary Fund should be doubled, to $500 billion, to help head off new problems in countries already hit hard by the global economic and financial crisis.
The officials also said, in a statement clearly aimed at hedge funds and other big private pools of capital, that "all financing markets and participants" need to fall under regulation in the future. And they vowed to make a tough push against tax havens.
With one eye on a crisis that is rapidly spreading to Eastern Europe and even countries that use the euro, the leaders highlighted the crisis-prevention role of the IMF, an institution whose relevance to the current global economy seemed in doubt only a few years ago.
