Tag Archives: M:FE

Swiss National Bank raises rates in shock move, ready for more

The building of the Swiss National Bank (SNB) is pictured in Bern, Switzerland June 16, 2022. REUTERS/Arnd Wiegmann

Register now for FREE unlimited access to Reuters.com

Register

  • SNB hikes rates for first time since 2007
  • Chairman says franc is no longer highly valued
  • Safe-haven franc surges after decision
  • Economists surprised by move, expect more hikes to come

BERN, June 16 (Reuters) – The Swiss National Bank raised its policy interest rate for the first time in 15 years in a surprise move on Thursday and said it was ready to hike further, joining other central banks in tightening monetary policy to fight resurgent inflation.

The central bank increased its policy rate to -0.25% from the -0.75% level it has deployed since 2015, sending the safe-haven franc sharply higher. Nearly all the economists polled by Reuters had expected the SNB to keep rates steady. L8N2Y31U7 read more

It was the first increase by the SNB since September 2007, and followed a 0.75 percentage point hike in borrowing costs by the U.S. Federal Reserve on Wednesday.

Register now for FREE unlimited access to Reuters.com

Register

Other central banks are also raising interest rates as they attempt to cool inflation driven higher by surging fuel and food prices that are straining budgets for households and businesses.

The Bank of England looks set to raise interest rates again on Thursday. read more

The European Central Bank signalled last week it would hike in July to check euro zone inflation that hit 8.1% last month. read more

SNB Chairman Thomas Jordan said rising Swiss inflation – which hit its highest level in nearly 14 years in May – meant the central bank may have to act again.

Even after Thursday’s 0.5 point rate rise, the SNB expects inflation in the first quarter of 2025 to reach 2.1%, outside its target for a rate of 0%-2%. In 2022 it expects a rate of 2.8%.

“Without today’s SNB policy rate increase, the inflation forecast would be significantly higher,” Jordan told a news conference.

“The new inflation forecast shows that further increases in the policy rate may be necessary in the foreseeable future,” he added, declining to indicate when or by how much the SNB could raise again.

“We are not in the business of very precise forward guidance, but … at the end of our forecast horizon inflation will again go over 2% so we have to see what measures are necessary,” Jordan said.

FRANC NO LONGER OVERVALUED

Analysts expect more hikes in the quarters ahead.

“Going forward, the monetary policy message is on the hawkish side,” said Gero Jung, an analyst at Mirabaud Asset Management. “For SNB economists, the Swiss franc is not over-valued anymore; second, inflation is expected to be above the limit that is associated with price stability in Switzerland.”

David Oxley at Capital Economics said it was likely the SNB will raise rates again, to zero or even into positive territory, before its next scheduled meeting in September.

Karsten Junius, an economist at J Safra Sarasin, expects the SNB to raise rates at its next four quarterly meetings by 25 basis points apiece, before pausing. “We would not rule out a 50bp hike at its next meeting in September either,” he said.

The SNB said Thursday’s rate increase was necessary to check rising prices in Switzerland, which had spread to goods and services previously unaffected by the impact of the war in Ukraine and supply chain bottlenecks linked to the pandemic.

Price rises were being passed on more quickly than before, Jordan said, and action was necessary to prevent inflation becoming entrenched. “It would be negligent not to take the inflationary development into account,” he said.

The recent depreciation in trade-weighted terms meant the Swiss franc was no longer highly valued on currency markets – long a concern for the SNB.

The bank said it was ready to intervene in markets to check excessive appreciation or weakening of the currency.

Switzerland’s labour union federation criticised the rate hike, saying the SNB was allowing the strong franc to rise further, putting jobs and wages at risk.

Register now for FREE unlimited access to Reuters.com

Register

Reporting by John Revill; Editing by Michael Shields and Catherine Evans

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Hong Kong university dismantles, removes Tiananmen statue

HONG KONG, Dec 23 (Reuters) – A leading Hong Kong university has dismantled and removed a statue from its campus site that for more than two decades has commemorated pro-democracy protesters killed during China’s Tiananmen Square crackdown in 1989.

The artwork, of anguished human torsos, is one of the few remaining public memorials in the former British colony to remember the bloody crackdown that is a taboo topic in mainland China, where it cannot be publicly commemorated.

Known as the “Pillar of Shame,” the statue was a key symbol of the wide-ranging freedoms promised to Hong Kong at its 1997 return to Chinese rule, which differentiated the global financial hub from the rest of China.

Register now for FREE unlimited access to Reuters.com

Register

The city has traditionally held the largest annual vigils in the world to commemorate the Tiananmen Square crackdown.

The Council of the University of Hong Kong (HKU) said in an early Thursday statement it made the decision to remove the statue during a Wednesday meeting, “based on external legal advice and risk assessment for the best interest of the University”.

“The HKU Council has requested that the statue be put in storage, and that the University should continue to seek legal advice on any appropriate follow up action,” it said.

Late on Wednesday night, security guards placed yellow barricades around the eight-metre (26-foot) high, two-tonne copper sculpture.

Two Reuters journalists saw scores of workmen in yellow hard hats enter the statue site, which had been draped on all sides by white plastic sheeting and was being guarded by dozens of security personnel.

Loud noises from power tools and chains emanated from the closed off area for several hours before workmen were seen carrying out the top half of the statue and winching it up on a crane towards a waiting shipping container.

A truck later drove the container away early on Thursday. The site of the statue was covered in white plastic sheets and surrounded by yellow barricades. University staff later placed pots of Poinsettia flowers, a popular Christmas decoration in Hong Kong, around the barricades.

‘MEMORIES WRITTEN WITH BLOOD’

Several months ago, the university had sent a legal letter to the custodians of the statue, a group which organised the annual June 4 vigils and has since disbanded amid a national security investigation, asking for its removal.

A June 4 museum was raided by police during the investigation and shut, and its online version cannot be accessed in Hong Kong. read more

The eight-metre-high “Pillar of Shame” by Danish sculptor Jens Galschiot to pay tribute to the victims of the Tiananmen Square crackdown in Beijing on June 4, 1989 is seen before it is set to be removed at the University of Hong Kong (HKU) in Hong Kong, China October 12, 2021. REUTERS/Tyrone Siu/Files

Read More

Danish sculptor Jens Galschiot, who created the statue, said in a statement he was “totally shocked” and that he would “claim compensation for any damage” to his private property.

Galschiot, who values the statue at around $1.4 million, had offered to take it back to Denmark, but said his presence in Hong Kong was necessary for the complex operation to go well and asked for reassurances he would not be prosecuted. read more

HKU said in its statement that no party had ever obtained approval to display the statue on its campus and that it had the right to take “appropriate actions” any time. It also called the statue “fragile” and said it posed “potential safety issues.”

Tiananmen survivor Wang Dan, who now lives in the United States, condemned the removal in a Facebook post as “an attempt to wipe off history and memories written with blood.”

The campus was quiet early on Thursday, with students on holiday. Some students dropped by the campus overnight after hearing the news.

“The university is a coward to do this at midnight,” said 19-year-old student surnamed Chan. “I feel very disappointed as it’s a symbol of history.”

Another student surnamed Leung said he was “heart-broken” to see the statue “being cut into pieces”.

TIANANMEN ERASED

The removal of the statue is the latest step targeting people or organisations affiliated with the sensitive June 4, 1989, date and events to mark it.

Authorities have been clamping down in Hong Kong under a China-imposed national security law that human rights activists say is being used to suppress civil society, jail democracy campaigners and curb basic freedoms.

Authorities say the law has restored order and stability after massive street protests in 2019. They insist freedom of speech and other rights remain intact and that prosecutions are not political.

China has never provided a full account of the 1989 Tiananmen Square crackdown. Officials gave a death toll of about 300, but rights groups and witnesses say thousands may have been killed.

“What the Communist Party wants is for all of us to just forget about this (Tiananmen). It’s very unfortunate,” John Burns, a political scientist at the university for over 40 years who had called for the statue to remain, told Reuters.

“They would like it globally to be forgotten.”

Register now for FREE unlimited access to Reuters.com

Register

Additional reporting by Sara Cheng, Alun John, Eduardo Baptista and Marius Zaharia; Writing by James Pomfret and Marius Zaharia; Editing by Sonya Hepinstall and Michael Perry

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

EU readies Belarus sanctions as migrants try to breach Polish border

  • EU set to agree legal basis for new Belarus sanctions
  • Germany accuses Belarus leader of ‘cynical power play’
  • Belarus denies encouraging migrants to try to enter EU
  • Kremlin says EU trying to ‘strangle’ Belarus
  • Putin, Merkel speak by phone on border crisis

SUPRASL, Poland, Nov 10 (Reuters) – Migrants trapped in Belarus made multiple attempts to force their way into Poland overnight, Warsaw said on Wednesday, announcing that it had reinforced the border as the European Union prepares to impose sanctions on Belarus over the crisis.

The bloc’s 27 ambassadors are set to agree on Wednesday that the growing numbers of migrants flying to Belarus to reach the EU border amount to “hybrid warfare” by President Alexander Lukashenko – a legal basis for new sanctions.

“Mr. Lukashenko …unscrupulously exploits people seeking refuge as hostages for his cynical power play,” Germany’s acting Foreign Minister Heiko Maas said on Twitter.

He described images from the Belarusian border, where people are stuck in freezing conditions with little food and shelter, as “horrific” but said the EU could not be blackmailed.

The EU accuses Belarus of encouraging the migrants – from the Middle East, Afghanistan and Africa – to try to illegally cross the frontier in revenge for earlier sanctions imposed on Minsk over human rights abuses.

Lukashenko has denied using the migrants as weapons and on Wednesday won a fresh show of support from his most powerful ally, Russia, which blamed the EU for the crisis and sent two strategic bombers to patrol Belarusian airspace.

“It is apparent that a humanitarian catastrophe is looming against the background of Europeans’ reluctance to demonstrate commitment to their European values,” Kremlin spokesman Dmitry Peskov told a briefing.

German Chancellor Angela Merkel spoke by phone with Russian President Vladimir Putin, urging Moscow to put pressure on Belarus over the situation at the border, a German government spokesperson said. Putin’s office said he suggested to Merkel that EU members discuss the crisis directly with Minsk.

Thousands of people have converged on the border this week, where razor wire fences and Polish soldiers have repeatedly blocked their entry. Some of the migrants have used logs, spades and other implements to try to break through.

“It was not a calm night. Indeed, there were many attempts to breach the Polish border,” Polish Defence Minister Mariusz Blaszczak told broadcaster PR1.

Video from the border obtained by Reuters showed young children and babies among the people stuck there.

“There are lots of families here with babies between two or four months old. They have not eaten anything for the past three days,” the person who provided the video told Reuters, saying they were a migrant themselves and declining to be named.

REINFORCEMENTS

The Polish border guards service reported 599 illegal border crossing attempts on Tuesday, with 9 people detained and 48 sent back. Blaszczak said the force of Polish soldiers stationed at the border had been strengthened to 15,000 from 12,000.

After midnight, two groups of migrants were turned back. One that was around 200 people near the town of Bialowieza and another of around two dozen was turned back near Dubicze Cerkiewne, a spokeswoman told Reuters.

Neighbouring EU state Lithuania, which followed in Poland’s footsteps by imposing a state of emergency at its border on Tuesday, reported 281 migrants were turned back that day, the highest figure since August when such pushbacks began.

The EU accuses Lukashenko of using “gangster-style” tactics in the months-long border standoff, in which at least seven migrants have died. The new EU sanctions would target around 30 individuals and entities including the Belarusian foreign minister, three EU diplomats told Reuters. read more

Lukashenko’s government blames Europe and the United States for the plight of the people stranded at the border.

The crisis erupted after the EU, United States and Britain imposed sanctions on Belarus over its violent crackdown on mass street protests that were sparked by Lukashenko’s disputed election victory in 2020.

Lukashenko turned to traditional ally Russia for support and financing to ride out the protests. The migrant crisis has given Moscow an opportunity to double down on its support for Belarus, a country it regards a strategic buffer against NATO, and criticise the EU.

Peskov accused the EU of trying to “strangle” Belarus.

Poland denies accusations by humanitarian groups that it is violating the international right to asylum by hustling migrants back into Belarus instead of accepting their applications for protection. Warsaw says its actions are legal.

Some migrants have complained of being repeatedly pushed back and forth by Polish and Belarusian border guards, putting them at risk of exposure, lack of food and water.

“Yesterday we helped to secure and evacuate one group of immigrants,” said Michal Swiatkowski, 30, a member of the Polish Red Cross rescue group from Ostrowiec Swietokrzyski.

“There were 16 people, most of them were children. They did not require medical attention, although we donated warm clothes, blankets and some food,” he told Reuters.

Reporting by Alan Charlish in Suprasl, Poland, Andrius Sytas in Kapciamiestis, Lithuania, Joanna Plucinska, Anna Koper, Pawel Florkiewicz in Warsaw, Robin Emmott in Brussels, Kirsti Knolle in Berlin, Dmitry Antonov and Maria Kiselyova in Moscow and Matthias Williams in Kyiv; writing by Matthias Williams; editing by John Stonestreet and Philippa Fletcher

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

French ambassador accuses Australia of deceit over submarine deal

  • Australia cancelled a deal with France’s Naval Group in Sept.
  • The fallout threatens to spill over into trade consequences
  • French ambassador said message leaks represented a “new low”

CANBERRA/SYDNEY, Nov 3 (Reuters) – France’s ambassador to Australia, Jean-Pierre Thebault, said on Wednesday that Australia acted with deceit when it abruptly cancelled a multi-billion dollar deal with Paris to build a fleet of submarines.

“The deceit was intentional,” Thebault told media in Canberra on Wednesday.

“And because there was far more at stake than providing submarines, because it was a common agreement on sovereignty, sealed with the transmission of highly classified data, the way it was handled was a stab in the back.”

Australia in September cancelled a deal with France’s Naval Group, opting instead to build at least 12 nuclear-powered submarines in a deal with the United States and Britain. read more

The new alliance, dubbed AUKUS, is designed to give Australia access to nuclear-powered submarines for the first time.

The decision has caused a major bilateral rift, with France recalling its ambassadors from Australia and the United States in protest. Thebault returned to Canberra last month and the speech on Wednesday is the first time he has spoken publicly on the bilateral relationship.

“These are not things which are done between partners – even less between friends,” said Thebault, who added that the French government had no gripe with the people of Australia.

Australian Prime Minister Scott Morrison declined to refute Thebault’s comments when speaking on Wednesday in the United Arab Emirates en route from the U.N COP26 climate summit.

“Claims were made and claims were refuted, what is needed now is for us to move on,” Morrison told reporters.

French President Emmanuel Macron on Sunday said Morrison had lied to him about Canberra’s intentions. read more

Morrison has denied the claim. He said he had previously explained to Macron that conventional submarines would no longer meet Australia’s needs.

Morrison and Macron spoke last week before the Australian leader publicly sought a handshake with his French counterpart at the G20 meeting.

The destabilisation of the usually close diplomatic relations between the two nations now threatens to spill over into trade consequences.

The European Union has twice postponed a planned round of free trade talks with Australia. In solidarity with France, European Commission President Ursula von der Leyen questioned whether the bloc could strike a trade deal with Australia. read more

The relationship was tested further this week after Australian media published leaked messages between Morrison and Macron that attempted to counter France’s claim that Australia did not give it sufficient warning that the contract would be cancelled. read more

Thebault said the leaking of the messages represented an “unprecedented new low” and he said that it sent a worrying signal to heads of state that confidential correspondence could one day be “weaponised against you”.

Australia’s Deputy Prime Minister Barnaby Joyce said Macron was wrong to accuse Morrison of lying.

“We had a major political leader call the prime minister of Australia a liar, and you can’t do that diplomatically,” Joyce told the Australian Broadcasting Corporation.

“This isn’t some tin-pot nation in the middle of nowhere… if a person calls you a liar, what are you going to do? You have to defend it and say you are not.”

U.S. President Joe Biden said last week that the handling of the new pact had been clumsy, adding that he had thought France had been informed of the contract cancellation before the new pact was announced.

Reporting by Jonathan Barrett, Colin Packham and Renju Jose; Editing by Himani Sarkar and Michael Perry

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Tigrayan and Oromo forces say they have seized towns on Ethiopian highway

ADDIS ABABA/NAIROBI, Oct 31 (Reuters) – Two different groups fighting Ethiopia’s central government said they had seized control of towns on Sunday as the prime minister appealed for citizens to take up arms.

The spreading conflict threatens to further destabilise Africa’s second most populous nation, once considered a stable Western ally in a volatile region.

Prime Minister Abiy Ahmed urged citizens to join the fight against the Tigray People’s Liberation Front (TPLF), the party in control of the rebellious northern region of Tigray, after Tigrayan forces said they took another town on a highway linking the capital of the landlocked nation to the port of Djibouti.

“Our people should march…with any weapon and resources they have to defend, repulse and bury the terrorist TPLF,” Abiy said in a Facebook post on Sunday night.

CLAIMS OF GAINS

TPLF spokesperson Getachew Reda said Tigrayan forces have seized the town of Kombolcha and its airport in the Amhara region. He spoke to Reuters by phone from an unknown location.

On Sunday night, insurgents from Oromiya, Ethiopia’s most populous region, said they had also seized the town of Kemise, 53 km (33 miles) south of Kombolcha on the same highway to the capital Addis Ababa.

Odaa Tarbii, a spokesperson for the Oromo Liberation Army (OLA), said the group had taken Kemise, 325 km (200 miles) from Addis Ababa, and were engaging government forces.

The OLA is an outlawed splinter group of the Oromo Liberation Front, a formerly banned opposition group that returned from exile after Abiy took office in 2018. The Oromo are Ethiopia’s largest ethnic group; many of their political leaders have been imprisoned under Abiy’s government.

In August the OLA and the TPLF announced a military alliance, heaping pressure on the central government.

Central government spokesperson Legesse Tulu, Ethiopian military spokesperson Col. Getnet Adane and Amhara regional spokesperson Gizachew Muluneh did not immediately respond requests for comment on the TPLF and the OLA’s claims.

Reuters could not independently verify Getachew’s claim as phone lines in Kombolcha appeared to be down on Sunday. Reuters could not reach anyone in Kemise.

On Sunday, the Amhara regional government said in a statement “all government institutions must suspend their regular activities and should direct their budget and all their resources to the survival campaign….officials on every level should mobilise and lead…to the front.”

They announced a curfew of 8 p.m. and urged citizens to provide private vehicles to support the campaign.

YEAR-LONG WAR

War broke nearly a year ago between federal troops and the TPLF, which dominated Ethiopian politics for nearly three decades before Prime Minister Abiy Ahmed was appointed in 2018. The conflict has killed thousands of civilians and forced more than two million people to flee their homes.

Tigrayan forces were initially beaten back, but recaptured most of Tigray in July. They then pushed into the neighbouring Amhara and Afar regions, displacing hundreds of thousands more civilians.

Regional forces from Amhara have fought alongside the military in Tigray. The two regions of Amhara and Tigray have a long-running boundary dispute over farmland in Western Tigray, currently under the control of the Amhara administration.

In mid-October, the Tigrayan forces said the military had mounted an offensive to push them out of Amhara. The military has accused the Tigrayan forces of starting the recent round of fighting.

Tigrayan forces have said they will keep fighting until Amhara forces leave the heavily fortified area of Western Tigray, and until the government permits the free movement of aid into the rest of Tigray.

The United Nations has previously accused the government of a de facto blockade of Tigray, where the U.N. says around 400,000 people are living in famine conditions. The government denies blocking aid.

Reporting by Addis Ababa and Nairobi newsrooms; editing by David Evans and Angus MacSwan

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Move over Apple, Microsoft now the world’s most valuable company

Microsoft logo is seen on the smartphone in front of displayed Apple logo in this illustration taken, July 26, 2021. REUTERS/Dado Ruvic/Illustration

Oct 29 (Reuters) – Apple Inc (AAPL.O) lost its crown as the world’s most valuable public company to Microsoft Corp (MSFT.O) on Friday, as the iPhone maker’s shares continued their downward slide.

Apple took a $6 billion hit to its sales during the fiscal fourth quarter due to a nagging global supply chain problem, leading to a miss on Wall Street expectations. Top boss Tim Cook said the impact will be even worse in the current holiday sales quarter. read more

“Compared to less hardware focused FAANG peers, Apple is also a lot more exposed to supply chain disruption,” said Sophie Lund-Yates, equity analyst at Hargreaves Lansdown.

Cupertino, California-based Apple’s shares were down 3.6% at $147, implying a market capitalization of $2.41 trillion. The Windows software maker’s shares were up 0.7% at $326.8 at a market valuation of $2.46 trillion. Microsoft’s shares were trading at a record high.

Apple, which has repurchased $421.7 billion over the years, had announced a massive $90 billion share buyback in April. As a result, the company’s outstanding stock pool keeps shrinking, ending its fiscal fourth quarter with 16.4 billion shares.

Microsoft’s stock has surged more than 45% this year, with pandemic-induced demand for its cloud-based services driving sales. Shares of Apple have climbed 15% so far this year.

Apple’s stock market value overtook Microsoft’s in 2010 as the iPhone made it the world’s premier consumer technology company. The companies have taken turns as Wall Street’s most valuable business in recent years, with Apple holding the title since mid-2020.

Analysts say Apple has managed the supply chain issue well, but with Cook warning of more pressure, the door is open to a hit to its performance as the holiday season kicks in.

In contrast, Microsoft on Tuesday forecast a strong end to the calendar year thanks to its booming cloud business, but it warned that supply-chain woes will continue to dog key units, such as those producing its Surface laptops and Xbox gaming consoles. read more

Reporting by Subrat Patnaik and Sruthi Shankar in Bengaluru; Editing by Bernard Orr, Saumyadeb Chakrabarty and Maju Samuel

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Hong Kong’s zero-COVID policy undermining financial hub status – industry group

A general view showing the Central Business District, in Hong Kong, China, September 15, 2021. REUTERS/Tyrone Siu

HONG KONG, Oct 25 (Reuters) – A financial industry group warned on Monday that Hong Kong’s zero-COVID policy and strict quarantine requirements for international travellers threatens to undermine the city’s status as a financial hub.

The Asia Securities Industry and Financial Markets Association (ASIFMA) said a survey of members, including some of the world’s largest banks and asset managers, showed 48% were contemplating moving staff or functions away from Hong Kong due to operational challenges, which included uncertainty regarding when and how travel and quarantine restrictions will be lifted.

Hong Kong has some of the most stringent travel restrictions in the world and is virtually COVID-19 free, however unlike regional rival Singapore, which is slowly re-opening its borders, the Chinese-ruled city has no public plan for opening up to international travellers.

Local leaders say their focus is removing restrictions on travel from Hong Kong to mainland China, which also has strict entry restrictions. At present travellers from Hong Kong to the mainland must still undergo quarantine.

“Hong Kong’s status as an (international financial centre) is increasingly at risk along with its long-term economic recovery and competitiveness as a premier place to do business,” Mark Austen chief executive of Asifma wrote in open letter to Hong Kong’s financial secretary Paul Chan.

The letter made a series of recommendations including publishing “a roadmap for exiting Hong Kong’s ‘zero-case’ based COVID-19 strategy beyond solely the immediate goal of opening borders with China”, as well as prioritising vaccinations.

Hong Kong has reported just over 12,300 cases since the start of the pandemic, mostly imported, and 213 deaths.

Regional rival Singapore is expanding quarantine-free travel to nearly a dozen countries, but authorities are grappling with how to do so while averting a surge of Covid-19 cases among older people and those with weak immune systems.

Reporting by Alun John; Editing by Michael Perry

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

In corporate crackdown, U.S. SEC takes aim at executive pay

WASHINGTON, Oct 22 (Reuters) – The new Democratic leadership of the U.S. securities watchdog has a message for Corporate America’s highly paid executives: if your company screws up, your pay is at risk.

Clawing back compensation is shaping up to be a key part of the U.S. Securities and Exchange Commission’s (SEC) agenda as it cracks down on corporate misconduct, raising the stakes for thousands of executives who could potentially lose millions of dollars in bonuses and stock sale profits.

“Clawbacks can be an important factor in accountability,” said John Coffee, a professor at Columbia University Law School. “If properly implemented, they can be much more effective than they currently are.”

Last week, the SEC said it would revive a rule left unfinished from the 2007-09 financial crisis that would require U.S.-listed companies to implement a plan to recoup executive compensation in the event they have to correct financial statements due to compliance failures.

But in behind-the-scenes enforcement talks with companies, the SEC has already dusted off a narrower clawback power created in 2002 following the Enron and WorldCom accounting scandals, according to four lawyers familiar with the private discussions.

That rule allows the SEC to force a public company’s chief executive or chief financial officer to return bonuses or other incentive-based pay in the event the company restates its results due to misconduct.

In 2016, a federal court settled a lingering question over whether the SEC could recoup pay from executives who were not directly accused of wrongdoing. It said the agency could, because the executives should not profit from the proceeds of foul play.

In nearly two decades, however, the SEC has used the 2002 clawback power sparingly overall, despite potentially hundreds of opportunities to so, and just 15 times to penalize executives who were not directly accused of misconduct, according to a new analysis by law firm Covington and Burling LLP.

Gerald Hodgkins, a partner in the firm’s Washington office and a former associate director in the SEC’s enforcement division, said it was unclear why the SEC had pursued so few such actions, but that “perceived unfairness” was one potential reason.

The SEC appears to be shifting its stance on the issue.

Its enforcement staff have recently proposed using the clawback power in private settlement negotiations over cases involving financial restatements where the CEO and CFO are not accused of misconduct, said four attorneys involved in the separate cases, in what appears to be a change in strategy.

Among them is Joseph Dever, a lawyer with Cozen O’Connor LLP and a former SEC enforcement attorney.

“Staff seems to be raising this remedy far more frequently now than in the past,” he said.

On one occasion, staff proposed clawing back an executive’s compensation after the issue with the company had been resolved, said one of the three other attorneys, adding that was highly unusual.

The three attorneys asked to remain anonymous to discuss private matters.

Reuters could not ascertain how frequently overall the SEC was proposing clawbacks in settlement discussions.

But Allison Lee, a Democratic Commissioner who was a senior enforcement attorney with the agency from 2015 to 2018, told Reuters in an interview that the 2002 power has been “underutilized.”

While Lee said she could not comment on enforcement probes over which she now has no oversight, she said of the power: “I’d like to see us ensure we are vindicating the recourse it provides for shareholders.”

ACCOUNTABILITY

Cracking down on corporations is a priority for Democrats who say the SEC has long been too soft on big business.

When properly enforced, clawbacks can improve accountability in an era where writing checks to appease regulators is seen by companies as a cost of doing business, say advocates.

Over the past decade, investors have pushed for corporate clawback policies for a range of missteps, but companies have struggled to get the cash back once it is out the door, said Coffee.

Goldman Sachs Group Inc (GS.N), for example, failed to recoup compensation from former Chief Operating Officer Gary Cohn over the Wall Street bank’s involvement in Malaysia’s 1MDB sovereign fund corruption scandal. He gave the money to charity instead.

That is why tougher regulatory clawback tools are important, say experts.

Last week, the SEC reopened to public comment an additional clawback rule it first proposed in 2015 but never finalized. The comment period closes on Nov. 22.

Required by the 2010 Dodd-Frank Act, that rule would go further than the 2002 power, capturing a broader range of corporate roles and situations in which incentive-based compensation could be recouped.

While it puts the responsibility of implementing and enforcing the clawbacks on companies and exchanges, Lee said it could be a “powerful” accountability tool.

“It’s based on the common-sense notion that you shouldn’t get to keep incentive-based comp that wasn’t actually earned,” she said in a follow-up statement. “I’m glad we’re finally moving toward implementing that mandate.”

Reporting by Chris Prentice in Washington
Editing by Michelle Price and Matthew Lewis

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Evergrande backer Chinese Estates’ stock soars on take-private offer

The company logo is seen on the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song

HONG KONG, Oct 7 (Reuters) – Shares of Chinese Estates Holdings (0127.HK), a former major shareholder of embattled developer China Evergrande (3333.HK), jumped as much as 32% on Thursday after it announced an offer to be taken private for HK$1.91 billion ($245 million).

The Hong Kong developer said on Wednesday the family of Chinese Estates’ biggest shareholder, Joseph Lau, had proposed to take it private by offering minority shareholders a 38% premium to its last traded price.

The offer represents the latest move by Lau and China Estates to emerge from the shadow of Evergrande, which is floundering due to a huge debt load and threatening the Hong Kong company’s future.

Formerly Evergrande’s second-biggest shareholder, Chinese Estates has already slashed its holding over the past few months to 4.39% from 6.48%. It has flagged a goal to exit the holding completely and estimates a loss of HK$10.41 billion for the current year from the stake disposal. read more

Eugene Law, business development director of China Galaxy International Financial, said as a listed company Chinese Estates would need to keep updating on its position in Evergrande and “it does not want that trouble”.

Once China’s top-selling property group, Evergrande is facing one of the country’s largest-ever defaults as it struggles with more than $300 billion of debt. Its fate is also unsettling global markets wary about the fallout of one of China’s biggest borrowers toppling.

Chinese Estates’ shares rose to HK$3.81 by noon. They resumed trading on Thursday after being suspended on Sept. 29.

Shares of the Hong Kong developer were down 42% this year before the trading suspension, dragged down by unrealized losses in its investment in Evergrande whose stock took a hit due to liquidity crisis and default risks.

Shares of Chinese Estates/Evergrande

In a statement late on Wednesday, Chinese Estates said its stock price may be further affected by Evergrande, as it is “cautious and concerned” about recent developments at the Chinese developer.

A delisting would reduce the costs and management resources to maintain the listing status, Chinese Estates added, and it could provide more flexibility to implement long-term business strategies.

Other than Evergrande, Chinese Estates said it also has significant investments in another Chinese developer, Kaisa Group (1638.HK), whose shares have also suffered falls over the past few months on wider liquidity concerns about China’s real estate sector.

Chinese Estates’ former chairman Lau has been a major backer of Evergrande chairman Hui Ka Yan and is a member of the so-called “poker club” of Hong Kong tycoons that includes Hui. read more

Lau, whose family owns about 75% of Chinese Estates’ equity capital, resigned as its chairman and chief executive in 2014 after he was found guilty of bribery and money laundering charges in the gambling hub of Macau.

($1 = 7.7857 Hong Kong dollars)

Reporting By Clare Jim and Donny Kwok; Editing by Anne Marie Roantree and Muralikumar Anantharaman

Our Standards: The Thomson Reuters Trust Principles.

Read original article here

Romanian parliament topples PM Citu’s minority government

Romanian Prime Minister-designate Florin Citu attends a news conference in Bucharest, Romania, February 26, 2020. Inquam Photos/George Calin via REUTERS

BUCHAREST, Oct 5 (Reuters) – Romania’s parliament toppled the nine-month-old minority government of Prime Minister Florin Citu in a vote of no-confidence on Tuesday, but key parties said they would work to return the previous majority coalition to power soon.

Romania, one of European Union’s poorest member states, has been locked in political stalemate for a month, threatening its economic recovery from the coronavirus pandemic and efforts to reduce large twin deficits.

“Citu’s government fell by a big margin, way above the minimum required (of 234 votes),” an opposition deputy overseeing the ballot boxes said.

The final count showed that 281 deputies and senators voted to topple Citu, who will stay on as caretaker premier until a new prime minister wins parliament’s confidence.

Citu’s coalition unravelled last month after the centrist USR, a relatively new grouping, withdrew its ministers in a row over a regional development fund, stripping him of a parliamentary majority. USR then filed a no-confidence motion, refusing to return to the government until Citu was ousted.

President Klaus Iohannis called on political parties to hold consultations next week on forming a new government before he nominates a new premier, most likely from the ranks of his ally, Citu’s centrist Liberal Party.

“Romania must be governed. We are in a pandemic, an energy price crisis…and now a political crisis. We need more than ever a mature (political) stance,” Iohannis told reporters. “To give parties more time to come up with a solution, I will call for consultations only next week.”

An early election is unlikely as parliament would need to reject two consecutive proposals for premier by Iohannis within 60 days, and coalition parties say they are bent on rebuilding a government quickly, given the current economic challenges.

Iohannis and coalition partners including the ethnic Hungarian UDMR and the USR have said the current, three-party reform-minded political set-up is the best recipe for Romania, overseeing a 29.2-billion-euro, EU-backed recovery plan.

The most likely outcome is a restoration of the previous coalition that had a 57% majority, but with a different prime minister, in keeping with the USR’s sole condition for rejoining government.

“We’re open to rebuilding our centrist ruling coalition,” said USR senior Dan Barna said.

The USR joined forces with the opposition ultra-nationalist AUR and Social Democrats to remove Citu on Tuesday.

Reporting by Radu Marinas; Editing by Mark Heinrich

Our Standards: The Thomson Reuters Trust Principles.

Read original article here