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Investment dealer fined $155000 for trading supervision shortfalls – Wealth Professional

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The perceived deficiencies in Instinet’s supervision were first noted in a December 2014 review by IIROC Trading Conduct Compliance (TCC) staff, which warned of potential quote manipulation. On January 22, 2015, Instinet said it was planning to enhance its internal compliance surveillance system to monitor for and detect quote manipulation activities.

For two years after that, IIROC continued to contact Instinet about repeat deficiencies in its trading supervision practices, at one point asking the dealer to provide a timeline for its proposed additions and modifications. Instinet repeatedly said that it was developing its monitoring system in-house, as it was not satisfied with the alerts available from third-party compliance monitoring system providers.

In May 2017, IIROC’s Trade Review & Analysis (TR&A) unit asked Instinet if it had identified certain instances of potential quote manipulation through trading activity conducted at various points in 2016, to which the firm said no. After TR&A asked for its quote manipulation policies and procedures, Instinet confirmed several details, including the fact that it supervised for quote manipulation manually by randomly selecting 25 trades executed on the dark market for each calendar quarter.

TR&A referred Instinet’s case to IIROC enforcement staff. It found that based on IIROC’s surveillance system, approximately 500 High and Very High Alert trades had been generated in 2016 by one of Instinet’s clients on trading volume of well over one billion shares in the dark market. Between January and August 2017, the client generated approximately 2,500 such alerts based on dark-market trading volume of around 1.07 billion shares; IIROC detected more than 2,000 more alerts in the succeeding months up to December 2017.

IIROC’s Enforcement Staff told Instinet of its concerns on the potential quote manipulation alerts in early December 2017. The firm then asked its client to issue a notice to its traders advising them of certain prohibitions on trading practices in Canada, and altered its order routing protocol to prevent orders from being exposed to the dark market on the way to lit markets, which significantly reduced the number of potential quote manipulation alerts.

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Amazon announces $100 million logistics investment in Mexico – TheChronicleHerald.ca

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By Daina Beth Solomon

MEXICO CITY (Reuters) – Amazon.com Inc said on Thursday it has invested $100 million in opening new warehouses in Mexico, including its first shipping centers outside the populous capital area, in a bid to offer faster deliveries.

The new sites include two so-called fulfillment centers – one near the northern city of Monterrey and another near the central city of Guadalajara – as well as a support building in the State of Mexico, just outside Mexico City.

Amazon also opened 12 delivery stations, bringing its total to 27 across the country, it said.

“The construction of a solid infrastructure network allows the company to stay closer than ever to clients, and thanks to that, it’s possible to offer fast deliveries,” Amazon said in a statement.

Monterrey and Guadalajara are the two biggest metropolitan zones of the country after the sprawling Mexico City area.

The new facilities represent 69,000 square meters (742,710 sq ft) altogether and create 1,500 direct and indirect jobs, Amazon said.

Amazon in total now runs five fulfillment centers, two support buildings and two classification centers in Mexico, where it launched its marketplace in 2015.

Enrique Alfaro, the governor of Jalisco state that is home to Guadalajara, said the new local warehouse would help more small and medium sized businesses ship their products faster and at lower costs.

Amazon is also striving to make inroads in Brazil, where it recently opened its fifth and biggest fulfillment center in the country, with 100,000 square meters (1,076,391 sq ft).

In both countries, which are the biggest economies in Latin America, Amazon is vying with local rivals for shopper loyalty, despite its ranking as the world’s biggest online retailer.

(Reporting by Daina Beth Solomon; Editing by Amy Caren Daniel)

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Citigroup Beefs Up China Expansion With Investment Bank Plan – BNN

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(Bloomberg) — Citigroup Inc. is planning to include an investment banking unit in China to take advantage of an expected steady stream of big stock deals as the nation opens up and liberalizes its financial markets, a person familiar said.

In intensifying discussions in recent months, the bank’s senior executives in Asia have been lobbying the bank’s top brass in New York to revive an application as part of a plan to form a China securities business, the person said, asking not to be identified before a final decision is made.

Its local executives last year considered opting out of establishing an investment bank, balking at the costs of hiring at least 35 people as regulations require, people familiar said at the time. The U.S. bank initially planned to focus only on building its brokerage and futures trading business and expanding its custodian services.

The strategy shift, which will require more capital, comes after the introduction of a new technology board in Shanghai, as well as eased rules for selling shares to the public, which is expected to generate lucrative fees on a slew of new economy IPOs over the next few years.

The bank will now need to play catch up with rivals including JPMorgan Chase & Co. and Goldman Sachs Group Inc. who have already won approval to take control of Chinese securities operations after the country this year opened fully to foreign banks.

Citigroup has tread carefully in China amid increased political tension between the two powers as well as regulatory pressure in the U.S.

The bank has been dogged by issues of risk controls, having fines imposed on it by U.S. regulators. Some executives have expressed concerns it may not receive the blessing by the U.S. Federal Reserve for its China expansion, the person said. The lender was this month assessed a $400 million penalty by the Office of the Comptroller of the Currency, which also demanded the bank seek its approval before “significant new acquisitions” and advance approval for anything beyond “hedging, market making and securitization transactions.”

A Citigroup spokesman declined to comment.

Citigroup is one of four sponsors arranging a massive initial public offering from billionaire Jack Ma’s Ant Group, which is said to seek to raise about $35 billion with dual listings in Shanghai and Hong Kong. Share sales on the mainland have jumped 63% this year, partly driven by the emergence of the country’s new Nasdaq-style STAR board which opened last year, according to data compiled by Bloomberg.

The U.S. bank generates more than $1 billion of revenue a year from its China-based clients — a tenfold increase from a decade ago. Its locally incorporated bank currently has outlets in 12 Chinese cities and held 178 billion yuan ($27 billion) of assets by the end of last year, according to its annual report. It also operates four small lending entities in China, according to its website.

©2020 Bloomberg L.P.

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Analysis: U.S. investment bankers' new pitch – Biden's tax hike – The Journal Pioneer

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By Joshua Franklin and Chibuike Oguh

(Reuters) – Investment bankers keen to win lucrative assignments have a new pitch for U.S. corporate owners: hire us to sell your company now or pay at least twice as much in taxes if Democratic presidential candidate Joe Biden has his way.

Biden has proposed raising the capital gains tax rate from 20% to 39.6% for those making over $1 million. He would also increase the corporate income tax rate from 21% to 28%.

Biden would have to win the presidency and his Democratic Party would have to gain control of the Senate and keep control of the House of Representatives in the Nov. 3 election for his tax proposals to become law. While far from certain, this prospect has been seized on by bankers hungry for new business.

“We urge all of our current and potential clients to take note of the potential forthcoming changes, along with their associated consequences, as they consider an exit strategy for their business in the near future,” Houlihan Lokey Inc bankers wrote in a note earlier this month.

The Biden campaign did not immediately respond to a request for comment.

The investment bankers’ pitch is geared toward individuals and families, as well as private equity firms, who control companies and can decide when to sell them. It also targets company founders, who may only sell one business in their lifetime, making it the most important transaction of their lives.

The strategy appears to be working. Sales of privately held U.S. companies totaled a record $253 billion in the third quarter, up fivefold from the second quarter and up 51% from the third quarter of 2019, according to financial data provider Dealogic. This is despite the COVID-19 pandemic suppressing corporate valuations in some sectors.

(Graphic: https://graphics.reuters.com/USA-ELECTION/BANKERS-BIDEN/ygdvzndadvw/)

“Since the summer we have seen a lot of dialogue from family offices about exploring a sale of some assets. Many of these investors are sophisticated about how they handle their affairs from a tax perspective,” said David Perdue, a partner in investment bank PJT Partners Inc’s strategic advisory group.

One of the U.S. companies pursuing a deal because of tax considerations is Asplundh Tree Expert LLC, a family-controlled tree-trimming firm, according to people familiar with the deliberations.

The family that has owned Asplundh since 1928 has been keen to hold onto the company and resisted overtures to sell to private equity firms hungry for a quick flip. When one of these firms, CVC Capital Partners Ltd, convinced the Asplundh family to sell it a minority stake in 2017, it had to use a buyout fund it manages that is dedicated to retaining holdings for a decade or more, rather than cashing out after a few years.

Now the Asplundh family is working with investment bankers to cash out on part of its stake, partly because of its concerns about upcoming changes in the tax system, one of the sources said. It is seeking a valuation for Asplundh of as much as $10 billion, according to the sources. Asplundh did not respond to a request for comment.

Even if Biden wins and implements his tax plan, corporate owners may still have time to cash out. Most of President Donald Trump’s corporate tax cuts, which were enacted into law in 2017, became effective in 2018, a year after he came into office.

Still, the big uptick in the divestitures of privately owned companies shows how some of their owners view Biden’s election victory, and subsequent tax changes, as likely.

BEST PRICE VERSUS TAX SAVINGS

Goldman Sachs Group Inc advised on more sales of privately held U.S. companies year-to-date than any other, followed by Morgan Stanley , JPMorgan Chase & Co and Bank of America Corp , according to Dealogic.

To be sure, getting the best price is still the overriding consideration for corporate sellers, rather than saving on taxes, investment bankers said. Private equity firms, in particular, are wary of being criticized by investors if they think they sold a company for the tax benefit of buyout fund managers, rather than getting the best price.

“There is a tax consideration and there is a more strategic consideration. The tax consideration only applies if you are ready to sell and could attain attractive valuation multiples that could lead to a successful sale,” said Solon Kentas, co-head of M&A for the Americas at UBS Group AG

(Reporting by Joshua Franklin and Chibuike Oguh in New York; Editing by Greg Roumeliotis and Lisa Shumaker)

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