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Chase Bank Limits Cash Withdrawals, Bans International... Before you read this report, remember to sign up to for 100% free stock alerts Chase Bank has moved to limit cash withdrawals while banning business customers from sending...

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Richemont chairman Johann Rupert to take 'grey gap... Billionaire 62-year-old to take 12 months off from Cartier and Montblanc luxury goods groupRichemont's chairman and founder Johann Rupert is to take a year off from September, leaving management of the...

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Cambodia: aftermath of fatal shoe factory collapse... Workers clear rubble following the collapse of a shoe factory in Kampong Speu, Cambodia, on Thursday

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Spate of recent shock departures by 50-something CEOs While the rising financial rewards of running a modern multinational have been well publicised, executive recruiters say the pressures of the job have also been ratcheted upOn approaching his 60th birthday...

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UK Uncut loses legal challenge over Goldman Sachs tax... While judge agreed the deal was 'not a glorious episode in the history of the Revenue', he ruled it was not unlawfulCampaign group UK Uncut Legal Action has lost its high court challenge over the legality...

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Cast a wide net when investigating bankers

Category : Business

While the action of the parliamentary commission on banking standards, in naming “the architects of a strategy” which led to HBOS having to be bailed out by the taxpayer, is laudable, its work, surely, has just started (Former HBOS chief asks to have his knighthood revoked, 10 April). Do not the bankers responsible for the morally “toxic” decisions that led to Libor-rate fixing also need to be, not only named and shamed, but banned from any further involvement in financial activities in the City?

The same applies to those responsible for the laundering of Mexican drug money; it cannot be sufficient to castigate only the bankers who cost the nation money, as the net must be cast much wider if there are to be any changes to the banking culture as we know it. The banking industry’s attempts at self-regulation, epitomised by Barclays’ “transform” programme, was revealed to be a sham almost immediately by the ridiculous bonus paid to Rich Ricci. If ever there was a time for Labour to open a debate on the creation of a people’s bank it must be now, especially as RBS seems ripe for nationalisation and the ring-fencing of “socially useless” banking is not due until 2019. As for knighthoods and other honours, all should be removed from anyone in the City guilty of condoning unethical financial transactions, and that includes advising on, and participating in, tax avoidance.
Bernie Evans

• How refreshing that the role played by former head of accountants at KPMG, the auditor for HBOS, is coming under scrutiny. Accountants are rarely called to account in the many cases where a half-awake person of integrity would have known about and refused to sign off the published company accounts. The accountants at News International, for example, were apparently unaware of countless illegal payments made to police and others in the long-running phone-hacking scandal.
Eddie Dougall
Bury St Edmunds, Suffolk

KPMG partner’s stock tips earned golf buddy $1m

Category : Business

Former senior partner Scott London charged by US authorities with insider dealing

US authorities have charged a former KPMG partner with insider dealing after he admitted giving his golfing buddy share tips in exchange for cash, jewellery and $25,000 worth of concert tickets.

Scott London, a senior KPMG partner in southern California, was charged with conspiracy to commit fraud and for leaking non-public information about companies he audited, including diet supplement firm Herbalife and shoe company Skechers.

The complaint filed by the securities and exchange commission (SEC) said London’s stock tip leaks had made his golf partner Bryan Shaw, a Californian jeweller, more than $1m (£650,000).

In exchange for the tips, Shaw gave London roughly 10% of the profits he made in the form of bags stuffed with up to $50,000 cash in $100 bills, a $12,000 Rolex watch, other jewellery and concert tickets, according to the filing.

One of London’s tips was that Herbalife was about to become a private company. “That is going to be where you make a ton of money,” London said, according to the criminal filing, “Because, you know, we’ll know that.”

US attorney André Birotte said London “chose to betray the trust placed in him as a financial auditor and to tip the trading scales for the benefit of insiders like himself”.

“The public has every right to fully expect a level playing field in our financial markets” he added.

London, who was fired by KPMG immediately when it discovered he had passed on the information, said the tips began in 2010 in casual conversations with “someone I’d known from the golf club”.

In an interview with the Wall Street Journal he said he didn’t realise Shaw was trading on the information he was leaking. “Once he told me he had traded, that’s when my heart sank,” London said. “We had discussions, this wasn’t right – I knew it was wrong – but it just happened.”

However, London admitted he continued to provide Shaw with information about Herbalife, Skechers and Deckers Outdoors.

In a statement London said: “I regret my actions in leaking non-public data to a third party regarding the clients I served for KPMG. Most importantly, and I cannot emphasise this enough, is that KPMG had nothing to do with what I did.”

KPMG has resigned as the auditor for Herbalife and Skechers after warning “that the firm’s independence has been impacted”.

London’s lawyer Harland Braun has admitted that his client knew he was breaking the law. “But he just can’t understand why he did it, and it’s hard to understand why he did it,” Braun told business news channel CNBC on Wednesday.

“It makes no sense. He’s looking back on the years that he did it. It made no sense from a dollar-and-cents point of view; it made no sense in terms of his ethics. He’s not trying to justify it in the slightest.”

Braun said London’s prospects were “pretty grim”. “His life is ruined. He’s 50 years old, he’s lost his career, he’ll probably lose his licence, he’s been disgraced, and he may have to do some jail time. That’s the best case scenario. It’s a very grim reminder of the consequences for anyone who wants to leak any insider information.”

London was due to appear in a federal court in Los Angeles late on Thursday. Shaw has also been charged.

Shaw has admitted he “profited substantially from stock trades” on a number of companies on which London provided “non-public information”.

He said he had been incredibly stupid, and was co-operating with the FBI, SEC and US Department of Justice.

“I expect that my actions will result in significant civil and criminal consequences, but I realise that this is the painful price I will pay for my transgressions,” he said in a statement before the charges were filed.

When Shaw’s brokerage firm, Fidelity, noticed his unusual trading patterns, it cut him off and Shaw and London agreed to end their arrangement. But when US authorities later approached Shaw about his trading, he agreed to cooperate, restarted his tip-sharing relationship with London and recorded him passing on information in a branch of Starbucks.

Ex-KPMG partner on insider charges

Category : Business

US authorities file criminal and civil charges against a former senior partner at accountancy firm KPMG over alleged insider trading.

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KPMG insider trading scandal caused by ‘lapse of judgment’

Category : Business

‘I have no idea what I was thinking,’ says ex-partner after auditor forced to resign as auditor for Herbalife and Skechers

A former KPMG accountant has blamed a “lapse of judgement” for the insider dealing scandal that has cost him his job and sparked a federal investigation.

Scott London, the partner in charge of the audit practice for KPMG in southern California, was fired by the accounting firm on Monday after it emerged he had given insider tips on the accountant’s clients to an unnamed investor. London, 50, had worked for KPMG for 29 years.

KPMG has resigned as auditor of two companies, supplements firm Herbalife and Skechers, a shoe company, after London breached their confidentiality. The Justice Department and Securities and Exchange Commission are now investigating a case that is causing the accountancy firm major embarrassment.

“I have no idea what I was thinking. I don’t know why there was a lapse of judgment, but there was,” London said in an interview with the Los Angeles Times.

London said he barely benefited from his decision to tip off a friend about his clients, a friend who it appears then set him up with the Feds.

According to the LA Times, London met a friend at a Starbucks in the San Fernando valley for what he assumed was a casual coffee. The friend handed him an envelope containing $5,000 cash. Unbeknown to London, he was being photographed secretly by the FBI.

London told the LA Times he had given the friend information because the friend was struggling financially. In return, he reportedly received about $25,000 in cash, a new Rolex watch and fancy dinners.

At KPMG, London managed more than 900 workers and was “responsible for monitoring the mentoring and performance evaluation of the employees as well as the overall growth and quality initiatives within the audit practice,” according to his profile on the Directors’ Organization, a group for companies’ board members.

Dow closes at new record high

Category : Stocks

With little on the docket, investors pushed stocks higher. First Solar surged on guidance. KPMG resigns as auditor for Herbalife and Skechers. J. C. Penney shares sink.

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Big five UK banks rue ‘dire year’ as £11bn of fines erase profit gains

Category : Business

PPI scandal and fines undermine improved performance at Barclays, HSBC, Lloyds, RBS and Standard and Chartered

An increase in profits at the big five UK banks was wiped out by more than £11bn of fines and compensation payments in 2012.

Despite an improved core business performance, fines from regulators and the costs of the mis-selling of payment protection insurance contributed to a 40% cumulative drop in profits from 2011 to £11.7bn, according to accountants KMPG.

Barclays, HSBC, Lloyds Banking Group, RBS and Standard Chartered posted results in a year where bleak headlines included the Libor scandal, the mis-selling furore, and slack control of money laundering.

KPMG’s bank performance benchmarking report concluded that banks had improved in their core performance due to better credit performance, or fewer bad loans, and stronger results from investment banking divisions, helped by more positive sentiment over the eurozone’s future.

Alongside the punitive costs banks incurred, profits were also written down because of a £12.8bn revaluation of the banks’ debt. Bill Michael of KPMG said: “Banks had a better performance year in 2012 but their improved core profits were eaten up by fines and other exceptional items. In terms of their reputations, 2012 was a dire year. This is why it is so important for them to address cultural and ethical perceptions and issues. Restoring customer trust is critical.”

KPMG warned that banks would need to significantly reduce costs to convince shareholders they could continue to generate strong returns, including cutting staff and wage bills.

The warning comes amid reports that Lloyds, bailed out by the taxpayer during the credit crunch, paid more than 20 of its staff more than £1m last year. Details of its high earners will be revealed in its annual report this week, but the bank said it could not comment on speculation.

Profit at Big Five banks ‘wiped out’

Category : Business

The major UK banks saw their core profits for 2012 wiped out by a mix of regulations and their own mistakes, a KPMG report says.

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Big Four accountancy firms ‘too close to company bosses’

Category : Business

The Competition Commission’s report on how KPMG, PwC, Ernst & Young and Deloitte audit 90% of businesses is due

The bosses of Britain’s largest companies are too close to the “Big Four” accountancy firms which carry out the overwhelming majority of audits, a report is expected to say on Friday.

The Competition Commission’s review into how KPMG, PwC, Ernst & Young and Deloitte audit 90% of UK-listed blue chip businesses is expected to say that while it found no evidence of collusion between them, there is a restricted amount of competition.

It is expected to attack the cosy relationship between auditors and senior management at City firms, who are often alumni of the Big Four themselves.

High-ranking members of Big Four firms also sit on many company boards.

It will reportedly not seek the break up of these firms – which also provide a wide range of non-audit services to their clients – but suggest measures to reduce their stranglehold over the UK’s largest firms, including a ban on “Big Four-only” clauses in loan documents from banks and giving shareholders a greater say in the choice of auditors.

Firms could also be ordered to rotate between auditors and invite other firms to tender for work on their accounts.

The investigation, ordered in 2011, was partly prompted by a House of Lords inquiry which found that listed companies, which must have their annual reports signed off by an auditor, use the same accountant for an average of 48 years, a figure the Big Four dispute.

The fear is that auditors become less sceptical over time about what clients tell them.

There was also anger that accountants gave banks a clean bill of health just before taxpayers had to rescue them during the financial crisis.

The inquiry has looked at issues such as the gap between the big four and mid-tier firms, barriers to entry and expansion for smaller firms, and cites the case of Arthur Andersen, which collapsed after it was implicated in the Enron scandal, as showing that size does not guarantee stability.

The Big Four’s audit and advisory income easily outstrips their rivals. In the financial year ended 2011, the audit income for the four largest firms ranged from £403m to £893m, compared with £133m for the largest mid-tier company. The Big Four have insisted competition is strong, pointing to downward pressure on fees.

“When reaching its provisional findings, the Competition Commission should recognise that the large company audit market currently produces competitive outcomes for large companies and investors,” PwC said.

The European Union’s has drafted a law which proposes mandatory switching or rotation of auditors every six years and even a market share cap. The US audit watchdog has also aired plans for auditor rotation.

HP accountants sued over Autonomy

Category : Business, World News

Deloitte and KPMG are being sued over their alleged role in Hewlett-Packard’s controversial purchase of Autonomy.

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Pay revolt ‘set to get stronger’

Category : Business

The 2012 “shareholder spring” over executive pay was an illusion, with the real battles likely to come in 2013-14, according to a KPMG report.

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