SEC limits political gifts after abuse scandals

Thursday, July 1, 2010; A10


SEC limits political gifts after abuse scandals

The Securities and Exchange Commission voted Wednesday to restrict investment advisers from contributing to political campaigns to win pension business in response to abuses in an industry that oversees $2.6 trillion of public retirement funds.

On a 5-to-0 vote, the commission move to ban executives at private-equity firms and hedge funds from managing pension-fund assets for two years if they give money to elected officials with influence in awarding investment contracts.

"Pay-to-play distorts municipal investment priorities, as well as the process by which managers are selected," SEC Chairman Mary L. Schapiro said.

The SEC and New York Attorney General Andrew M. Cuomo have investigated state pension-fund corruption for more than a year. Quadrangle Group LLC, the private-equity firm co-founded by former Obama administration auto czar Steven Rattner, agreed in April to pay $12 million to resolve allegations it provided kickbacks to win an investment from a New York state retirement fund.

The SEC rules would bar hedge-fund and private-equity executives from directing contributions by spouses, lawyers, affiliated companies or political action committees.

-- Bloomberg News


Government aid to Airbus illegal, WTO rules

The World Trade Organization ruled Wednesday that European governments gave planemaker Airbus illegal subsidies in its battle with U.S. rival Boeing, in a first key ruling on a long-running dispute between the European Union and Washington.

Made public three months after it was delivered to U.S. and E.U. trade officials, the WTO's decision runs 1,061 pages over the question of whether the E.U. unfairly abetted Airbus's rise to No. 1 aircraft manufacturer in the world.

The verdict confirms wrongdoing, but it was unclear how hard it came down against Europe as the WTO awaits the result of a countersuit alleging illegal U.S. support for Boeing.

"This important victory will benefit American aerospace workers, who have had to endure watching Airbus receive these massive subsidies for more than 40 years," U.S. Trade Representative Ron Kirk said.

The WTO said in a statement, however, that E.U. support "did not damage Boeing's pricing or profitability, and did not lead to a loss of jobs at the company."

Washington and Brussels have 60 days to appeal. An Airbus spokeswoman said she expected both sides to challenge elements of the ruling.

-- Associated Press


-- Rejection of loan guarantee reconsidered: The U.S. Export-Import Bank will reconsider its rejection of a loan guarantee for Bucyrus International so it can sell coal-mining equipment for a power plant being developed by Reliance Power of India.

The bank acted after Democratic lawmakers in Wisconsin, where Bucyrus is based, appealed the rejection last week of $560 million in financing because of the project's potential carbon emissions.

Reliance has told the bank it may buy U.S. equipment for a renewable energy project, bank Chairman Fred Hochberg said in a letter.

-- Rules limit payout of bankers' bonuses: Bankers will only be able to get part of their yearly bonuses in cash upfront under new European Union rules for next year. A deal announced Wednesday between E.U. governments and E.U. lawmakers will require banks to limit cash bonus payouts, with most executives getting 30 percent immediately and the rest later if the company performs well.

The draft rules go to the European Parliament next week, where they are expected to win approval.

The discussion was launched after an outcry over payments to executives of banks that had received large bailouts to avoid collapse during the financial crisis.

In January, cash bonuses will be capped at 30 percent of the total bonus and 20 percent for "particularly large" bonuses. The measure leaves it to individual governments to determine what "particularly large" means in their economies.

The new rules set minimum caps for all 27 members of the E.U.

-- Microsoft halts Kin phones: Microsoft said Wednesday that it will halt the planned rollout of Kin One and Kin Two phones beyond the United States, less than two months after Verizon Wireless started selling them. Microsoft unveiled the two Kin phones in April, although they were widely anticipated after photos and details appeared on blogs last year. Neither Microsoft nor Verizon Wireless would say how many Kin phones have been sold. On Monday, Verizon cut the price of Kin One and Kin Two to $30 and $50, from $50 and $100, respectively.

-- From news services

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