Spain’s Tax Breaks, TD Bank, Ex-UBS Banker: Compliance

The European Union expanded its crackdown on illegal tax breaks, ordering Spain to recover money from companies that benefited from rules encouraging merger activity outside of the country.

The European Commission said the Spanish measures unfairly rewarded companies for buying stakes in foreign competitors. Telefonica SA (TEF) last year lost a court bid to challenge a related EU probe into Spanish tax breaks.

The EU is targeting tax deals throughout the 28-nation bloc that may have given domestic and overseas companies unfair advantages. The EU is reviewing agreements between Ireland and Apple Inc. (AAPL), Luxembourg and Amazon.com Inc. (AMZN) and Starbucks Corp. (SBUX) in the Netherlands.

The Brussels-based commission first began its probe into Spain in 2007 after complaints.

Compliance Action

Global Banks Said to Get EU Fines Over Swiss Franc Libor Rigging

Global banks embroiled in a scandal for manipulating benchmark interest rates face European Union fines as soon as next week, according to two people with knowledge of the case.

The European Commission is poised to announce penalties over rigging of Libor rates linked to the Swiss franc, said the people who asked not to be identified because details of the probe are confidential. UBS AG, JPMorgan Chase & Co. (JPM), Credit Suisse Group AG (CSGN) and Royal Bank of Scotland Group Plc were among at least four banks in talks to settle the probe earlier this year, Bloomberg News reported in January.

The penalties would add to last year’s record 1.7 billion-euro penalty ($2.2 billion) for Deutsche Bank AG and five other companies that were fined for colluding over derivatives linked to the London and euro interbank offered rates. The EU is also investigating banks over the suspected rigging of foreign exchange rates.

EU Competition Commissioner Joaquin Almunia yesterday declined to comment on the timing of the Swiss franc decision. His spokesman, Antoine Colombani, today also declined to comment. UBS representatives didn’t immediately respond to a request for comment. JPMorgan, Credit Suisse and RBS declined to comment.

EU cartel settlements typically involve an admission of liability and fines.

TD Bank Settles With States Over Data Breach, New York Says

TD Bank NA, which lost electronic files containing information for as many as 260,000 customers in 2012, agreed to pay $850,000 to settle a multistate probe into the security breach, New York’s attorney general said.

The unit of Canada’s Toronto-Dominion Bank (TD) lost unencrypted backup tapes containing 1.4 million customer files with information accumulated over at least eight years, Attorney General Eric Schneiderman said. The accord also requires the bank to improve its data-security practices.

The number of cybersecurity incidents globally has soared 48 percent to 42.8 million this year, according to a PricewaterhouseCoopers LLP survey. Data breaches in New York more than tripled from 2006 to 2013 and cost businesses in the state at least $1.37 billion

Courts

Ex-UBS Banker Weil Knew Nothing of Tax Scheme, U.S. Jurors Told

Raoul Weil, once the head of UBS AG (UBSN)’s global wealth-management business, didn’t know that “rogue” underlings were helping Americans evade taxes, his lawyer told jurors at the start of a trial in Florida.

Weil, 54, was indicted in 2008 and accused of conspiring to help as many as 17,000 U.S. taxpayers hide $20 billion in accounts from the Internal Revenue Service. He was arrested last year in Bologna, Italy, and waived extradition to face trial in Fort Lauderdale, where jurors got an overview of the case Oct. 14.

Defense lawyer Aaron Marcu said the U.S. case hinges on “rogue” bankers from UBS, the largest Swiss bank, and clients who will implicate Weil to save their own skins. Weil is the highest-ranking official among three dozen foreign bankers, lawyers and advisers charged in a seven-year U.S. crackdown on offshore tax evasion.

Justice Department attorney Mark Daly told jurors Weil directed a complex scheme to avoid investigation using specially configured laptops.

One witness against Weil will be Martin Leichti, another former head of cross-border banking at UBS, Daly said. Leichti signed an agreement in 2008 in which the Justice Department agreed not to prosecute him for tax crimes.

The case is U.S. v. Weil, 08-cr-60322, U.S. District Court, Southern District of Florida (Fort Lauderdale).

Interviews/Commentary

EU’s Barnier Slams Bonus Rule Evasion by Banks as ‘Bad Signal’

The use by banks of allowances to evade bonus rules sends a “bad signal,” Michel Barnier, the European Union’s financial-services chief, said in an e-mailed statement.

The allowances have been characterized in the press as a means of circumventing the Capital Requirements Directive on the maximum ratio between fixed and variable remuneration, Barnier said in the statement.

Use of the allowances signals to society that “the banks have not learned the lessons of the financial crisis” and have failed to adapt their cultures to the current regulatory environment, he said.

The commission and the European Banking Authority will review the situation, Barnier said.