Wealth management firms warned by FSA

The regulator is worried that client money is at risk from sloppy investment practices

Firms that manage investments for rich people have been warned they are failing to invest client money properly.

The Financial Services Authority (FSA) has found evidence that many "wealth management" firms may be exposing their customers to too much risk.
The regulator has written to 260 firms, telling them to ensure their clients' investment portfolios are suitable.
The FSA said a recent review had found "significant, widespread failings".
"We have recently reviewed the suitability of client portfolios in a sample of firms in the wealth management industry," the FSA said in a letter to the chief executives of the registered firms.
"We have identified significant, widespread failings, which we are concerned may also be prevalent in firms outside our sample."
Some of the firms are divisions of big banks and some are independent businesses.
The letter is a warning to the industry to get its house in order.
The FSA looked at a selection of 16 firms to see if the clients' investment portfolios had been managed in line with their "knowledge and experience, financial situation and investment objectives".
The review of records at 16 firms found that:

• 14 had exposed their customers to high, or medium-high, risk of loss, because of unsuitable investments, or investments whose suitability it was not possible to judge
• of the client files examined, 79% had a "high risk of unsuitability", or the suitability could not be decided
• of the files examined, 67% of the investments were not in line with either the firm's own investment model, the client's willingness to accept risky investments, or the client's own investment aims.

The firms that were scrutinised are being followed up by the FSA and some have put in place plans to bring their customers' portfolios back in line.
The FSA said it was especially worried about poor record keeping at the wealth management firms, which meant they did not have basic know-your-client information, or records of the personal financial situations of their clients.
It had also found that investment portfolios did not match the clients' stated willingness to take risk, or to their personal investment objectives.
"These findings give rise to concerns that there is an unacceptable risk of customers of wealth management firms experiencing unfavourable outcomes," the FSA said.
The Financial Ombudsman Service (FOS) said it had received 1,148 complaints about portfolio management in 2010-11, which was 10% more than in the previous year.
About two-thirds of those complaints are currently being decided in favour of the complainant.

Read More

Zara-owner Inditex's profits rise on global expansion

Catherine, the Duchess of Cambridge, was spotted wearing a Zara dress after her wedding

The world's largest clothes retailer, Inditex, has reported rising profits as its global expansion continues.

The owner of the Zara fashion chain said net profits for the period from February to the end of April were up 10% on the same period last year at 332m euros ($475m; £292m).
Inditex said it opened 110 stores in 29 different countries during the quarter, including its first store in Australia.
The company had a total of 5,154 stores by the end of April.
Zara has had its profile boosted after Catherine, the Duchess of Cambridge, was pictured in a Zara dress.
Inditex also announced plans to expand its online business, selling Zara clothes online in North America.
Diversification The results come as many clothing retailers are struggling with rising costs and reduced demand in developed markets.

Global expansion has offset weakness in Inditex's home market of Spain

"It's one of the most diversified clothing retailers which gives it a greater stability. You have to put that in context of the fact that its home market, Spain is so weak," said Mike Dennis, a retail analyst at MF Global.
At the same time, analysts say the company has benefited from manufacturing more of its clothes in Spain and North Africa than its rivals, so it has not been exposed to rising wage costs in Asia.
"The wage inflation in Asia creates the issue of moving your supply to a same-cost or lower-cost manufacturing plant inland in China, or to another market, I'm sure there is a cost to doing that," added Mr Dennis.
Also on Wednesday, rival fashion retailer Hennes & Mauritz said that its like-for-like sales were up 2% in May from a year earlier.
The world's second largest clothes retailer said turnover in the quarter hit 27.6bn crowns ($4.36bn; £2.7bn).

Read More

Greek debt fears put French bank ratings on review

BNP Paribas is one of the banks that may be affected

Ratings agency Moody's has warned it may downgrade the credit rating of three French banks because of their exposure to Greek debt.

Credit Agricole, BNP Paribas and Societe Generale all face a possible downgrade because they could face losses on a Greek default.
Credit ratings are a measure of how likely a company or country is to repay its debts.
Moody's has already downgraded the credit ratings of eight Greek banks.
European leaders have yet to agree on the terms of a second bail-out for Greece.
On Wednesday, the country is expected to see another wave of general strikes against austerity measures.
In a statement, Moody's said: "Today's actions reflect Moody's concerns about these banks' exposures to the Greek economy."
Societe Generale and Credit Agricole both hold majority stakes in Greek banks.
BNP Paribas does not have a stake in a Greek bank, but Moody's estimates that it held about 5bn euros (£4.4bn, $7.2bn) of Greek government debt as of December 2010.

Read More

Samsonite shares fall 10% on Hong Kong trading debut

 

Samsonite, founded in Denver, Colorado, in 1910, is the latest upmarket company to list in Hong Kong

Samsonite shares have tumbled on their debut at the Hong Hong stock exchange on investor concern about the strength of the global economic recovery.

Its shares fell by as much as 10% in early morning trade to HK$12.96 from an offer price of HK$14.50
The upmarket luggage firm had raised $1.25bn (£771m) via an initial public offering (IPO).
Samsonite is the latest big brand to list in Hong Kong in order to tap into the lucrative Chinese market.
The Italian fashion house Prada is due to price its IPO on Friday and make its trading debut on June 24.
Tough times However, recent IPOs have struggled.
Samsonite's fall comes even thought it priced its flotation at the lower end of a proposed range.
Earlier this month Australian mining company Resourcehouse dropped its Hong Kong IPO plans because of a poor response from investors.
Meanwhile, companies including MGM China and commodities trader Glencore have also had muted debuts on the stock exchange.
Analysts said that investor's appetite has been blunted.
"Of course you have to attribute that to the weak sentiment in the market and in the meantime people won't be too interested in IPOs," said Alex Wong of Ample Finance Group.
Debt payment Despite the poor debut, the money raised by the flotation will allow Samsonite's owners - private equity group CVC and Royal Bank of Scotland - to pay off debt.
CVC bought Samsonite in 2007 for $1.7bn at the height of the credit boom.
But the company struggled when travel was hit by the financial crisis and Royal Bank of Scotland ended up taking a 30% stake as part of a debt restructuring.
The company is betting on growth in Asia, where leisure travel is becoming increasingly affordable.
Samsonite was founded by US trunk maker Jesse Shwayder in Denver, Colorado, in 1910.
One of his first cases was called Samson, after the biblical figure known for his strength, and was designed to withstand the hardships of travelling through America's West.

Read More

Nokia and Apple settle patent dispute

 

Nokia claimed some technology in the iPad infringed its patents

Nokia and Apple have agreed a technology licensing agreement that ends the long-running legal dispute between the two firms.

"The agreement will result in settlement of all patent litigation between the companies," Nokia said.
Nokia sued Apple for patent infringements in 2009 and extended the action in December last year.
Apple had countersued, accusing Nokia of infringing its patents.
Nokia said Apple had agreed a one-off payment, the value of which was not disclosed, and ongoing royalties to use its technologies.
Apple said the deal covered both companies' patents.
Counter claims

What this story really shows once again is how one phone, the iPhone, has proved the undoing of a company whose dominance seemed unassailable just four years ago"

Rory Cellan-Jones Technology correspondent, BBC News

"We are very pleased to have Apple join the growing number of Nokia licensees," said Nokia's chief executive Stephen Elop.

"This settlement demonstrates Nokia's industry-leading patent portfolio and enables us to focus on further licensing opportunities in the mobile communications market."
Apple said the two firms had agreed to "drop all of our current lawsuits and enter into a licence covering some of each other's patents, but not the majority of the innovations that make the iPhone unique".
"We're glad to put this behind us and get back to focusing on our respective businesses."
'Positive news' Nokia's various claims against Apple included alleged patent infringements of touch interfaces, caller ID, display illumination, and 3G and wi-fi technology.
Apple had also claimed that Nokia had infringed many of its patents.
Both sides had always denied each other's claims.
"This is the first positive news from Nokia for a long time. They can both focus on their businesses now, and the dispute was settled to Nokia's advantage," said Mikael Rautanen at research group Inderes in Helsinki.
At the end of last month, Nokia said it expected sales and profit margins for the current quarter to be well below its previous forecasts.
The company has been struggling to reposition itself in the rapidly-growing smartphone sector, where it is trying to make up ground lost to competitors such as Apple's iPhone and phones using Google's Android operating system.

Read More

DBD: Dtac registered Thai firm

Total Access Communication (Dtac) is a Thai company, Department of Business Development (DBD) director-general Banyong Limprayoonwong said on Thursday.

Citing the company's registration and shareholding structure documents, Mr Banyong said Thais hold 51 per cent of Dtac and the remaining 49 per cent is foreign owned.

True representative Suphasorn Honchaiya presents documents claiming that Dtac violates the Foreign Business Act at the Crime Suppression Division on June 14, 2011. (Photo by Surapol Promsaka Na Sakolnakorn)

He said True Move will this afternoon hand over to his department the documents it claimed to have derived from an in-depth check which concluded that 71.35 per cent of Dtac shares are held by foreigners and only 28.65 per cent by Thais.
Mr Banyong said the documents would be examined. If it were found that Dtac really has foreign majority shareholders it would be reclassified as a foreign firm.
If it is so, there would be tracing  to see whether Dtac had applied to the DBD for permission to run a telecommunication business. Telecommunication is included in the No 3 list attached to the Foreign Business Act and a foreign firm is required to seek permission from the department prior to starting a business, he added.
If Dtac had failed to do so, the penalty would be a fine of between 100,000 baht and one million baht and/or a jail term of no more than three years.
True Move on Tuesday filed a complaint with the Crime Suppression Division against its bigger rival Dtac, alleging it had a foreign majority shareholder in breach of the law.
The company asked the Crime Suppression Division to launch a new investigation into Dtac's ownership based on a report by Telecommunications Committee of the House of Representatives on April 21.
According to True, the report showed that Dtac is a foreign entity by law with a shareholding structure comprising only 28.65 per cent Thai ownership and the remaining 71.35 per cent owned by foreigners.

Read More

Activists call for probe into decision to close Khmer Rouge case

Bandit You Bunleng and Herr Doktor Siegfried Blunk involved in JUDICIAL MISCONDUCT?

Jun 14, 2011
DPA

Phnom Penh - An organization monitoring Cambodia's Khmer Rouge tribunal said Tuesday the United Nations must examine the court's decision to close the investigation into its highly politicized third case.

The Open Society Justice Initiative, which is funded by US billionaire George Soros, said the step was essential in order to restore public trust in the UN-backed tribunal.

The group said the investigating judges had failed to examine fully the 'allegations of mass murder and other atrocities' against the suspects in Case Three - a case the Cambodian government has repeatedly said it would not permit to proceed to trial.

The suspects, whom the court has not named, were senior Khmer Rouge military officers and are suspected of involvement in thousands of deaths.

An investigation was needed since 'recent actions and omissions' by the investigating judges 'raise serious questions, including the possibility of gross negligence in the performance of - or that the judges knowingly acted in contravention of - their judicial duties,' the OSJI said.

The UN has not yet commented. Tribunal spokeswoman Yuko Maeda said Tuesday the judges had no comment.

The investigating judges - Germany's Siegfried Blunk and Cambodia's You Bunleng - announced their decision to close Case Three on April 29.

In subsequent public comments international prosecutor Andrew Cayley indicated he believed the investigation was deficient.

Cayley listed a number of omissions, including the investigating judges' failure to question the two suspects or to visit sites where the alleged crimes had taken place.

The OSJI said the court's actions when combined with the government's opposition to Case Three and to Case Four, which involves another three ex-Khmer Rouge, 'suggest that the outcome of (each) case has been pre-determined.'

On Monday the Cambodia Daily newspaper said several international staff in the investigating judges' office had quit following disagreements over the decision to close Case Three.

One of them was Stephen Heder, an expert on the Khmer Rouge movement who was employed as a consultant. In his May 5 resignation email, Heder said he had quit because the judges had decided to close the case 'effectively without investigating it, which I, like others, believe was unreasonable.'

In late May the UN rejected allegations it had interfered with investigations at the tribunal or put any pressure on any court officials to scupper the cases.

The court's second case, against four senior surviving leaders of the movement, is scheduled to begin June 27. More than 2 million people are thought to have died during the Khmer Rouge's rule from 1975 to 1979.

Read More

Abhisit: Pheu Thai's special zone unrealistic vote bait

The Pheu Thai Party's proposal to make the three troubled southern border provinces a special administrative zone is purely intended to win votes, and is not a realistic solution to the problem, Democrat Party leader Abhisit Vejjajiva said on Wednesday.

Prime Minister Abhisit was commenting on an interview by Pheu Thai's No.1 party list candidate Yingluck Shinawatra, who said her party would turn the three southern border provinces of Yala, Pattani and Narathiwat into a special administration zone.

Prime Minister and Democrat Party leader Abhisit Vejjajiva

He said what Ms Yingluck said was not realistic.

The Democrat Party's policy is to give more power to local administrations - municipalities, tambon and provincial administration organisations (TOA and POA).

"If a special administration is set up, like Pattaya City, the TOAs or POAs would be gone.

"I assume that the special administration (mentioned by Pheu Thai) would be based in Pattani. If this is true, the people in Betong and Sungai Kolok would come under Pattani.

"I don't see how this would improve the people's quality of life," Mr Abhisit said.

The prime minister also disagreed to an idea to relocate heavy industries to the three southern border provinces, saying this would only cause more conflict to the area.

Ms Yingluck, meanwhile, avoided any commitment to take part in scheduled election policy debates between party leaders again.

She said she was not sure if she will be available for the forums organised by the People's Network for Election in Thailand (Pnet).

Ms Yingluck said her campaign schedule was tight and she had to tour throughout the country until just before July 3, so she was still undecided whether she would be available for the debates.

Pnet has scheduled a forum for the leaders of six political parties to debate their policies on June 23 and for Prime Minister and Democrat leader Abhisit and Ms Yingluck, as Pheu Thai's prime ministerial candidate, to debate on June 24.  The venue for the debates has not been disclosed.

Mr Abhisit has agreed to both debates.

Pheu Thai's No.1 party list candidate Yingluck Shinawatra

Ms Yingluck maintained that even if Pheu Thai did not take part in the debates, its absence was unlikely to make any difference to its popularity since, according to a party survey, the people wanted to hear Pheu Thai candidates speak in their constituencies.

On Mr Abhisit's questioning whether she can make her own decisions, or must seek approval first, Ms Yingluck said the people would make their own judgement on this matter.

Although she may be inexperienced in politics, she had much experience in business and leadership, she said.

Mr Abhisit has agreed to both debates.

Ms Yingluck maintained that even if Pheu Thai did not take part in the debates, its absence was unlikely to make any difference to its popularity since, according to a party survey, the people wanted to hear Pheu Thai candidates speak in their constituencies.

On Mr Abhisit's questioning whether she can make her own decisions, or must seek approval first, Ms Yingluck said the people would make their own judgement on this matter.

Although she may be inexperienced in politics, she had much experience in business and leadership, the former chief executive of Advanced Info Service (AIS) and until recently chairwoman of the family's  SC Asset Corporation said.

Read More