Archive for May, 2013

China punishes two brokerages in IPO fraud crackdown

Friday, May 31st, 2013 | Finance News

BEIJING (Reuters) - China's securities watchdog has punished two brokerages for violating rules in helping fraudulent firms to list shares, underlining Beijing's determination to bring credibility to a stock market some have likened to a casino.

The China Securities Regulatory Commission will fine Minsheng Securities 2 million yuan ($326,000) for failed due diligence in Shanxi Tianneng Technology's attempt to launch an initial public offering in 2011, the regulator said in a statement on its website.

It also gave a warning to Nanjing Securities for a similar violation when it advised Guangdong Xindadi Biotechnology in 2012, the CSRC said. Both IPOs were halted after frauds were uncovered.

Tianneng and Xindadi provided falsified financial information in their offering documents, the CSRC said.

In May, the CSRC suspended Ping An Securities' underwriting licence for three months after it helped fraudulent firm Wanfu Biotechnology to list shares in 2011.

China's IPO market was suspended late last year as Beijing looks to clean up the opaque market and improve the quality of those companies that are allowed to list.

But IPOs in China are due to resume as early as next month.

China's stock market has suffered from rampant corporate scandals, while financial irregularities by some companies have dented the reputation of Chinese stocks traded overseas.

($1 = 6.1345 Chinese yuan)

(Reporting by Kevin Yao; Editing by Michael Perry)

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Judge orders Google to give customer data to FBI

Friday, May 31st, 2013 | Finance News

SAN FRANCISCO (AP) — A federal judge has ruled that Google Inc. must comply with the FBI's warrantless demands for customer data, rejecting the company's argument that the government's practice of issuing so-called national security letters to telecommunication companies, Internet service providers, banks and others was unconstitutional and unnecessary.

FBI counter-terrorism agents began issuing the secret letters, which don't require a judge's approval, after Congress passed the USA Patriot Act in the wake of the Sept. 11, 2001, attacks.

The letters are used to collect unlimited kinds of sensitive, private information, such as financial and phone records and have prompted complaints of government privacy violations in the name of national security. Many of Google's services, including its dominant search engine and the popular Gmail application, have become daily habits for millions of people.

In a ruling written May 20 and obtained Friday, U.S. District Court Judge Susan Illston ordered Google to comply with the FBI's demands.

But she put her ruling on hold until the 9th U.S. Circuit Court of Appeals could decide the matter. Until then, the Mountain View, Calif.-based company must comply with the letters unless it shows the FBI didn't follow proper procedures in making its demands for customer data in the 19 letters Google is challenging, she said.

After receiving sworn statements from two top-ranking FBI officials, Illston said she was satisfied that 17 of the 19 letters were issued properly. She wanted more information on two other letters.

It was unclear from the judge's ruling what type of information the government sought to obtain with the letters. It was also unclear who the government was targeting.

The decision from the San Francisco-based Illston comes several months after she ruled in a separate case brought by the Electronic Frontier Foundation over the letters. She ruled in March that the FBI's demand that recipients refrain from telling anyone — including customers — that they had received the letters was a violation of free speech rights.

Kurt Opsah, an attorney with the foundation, said it could be many more months before the appeals court rules on the constitutionality of the letters in the Google case.

"We are disappointed that the same judge who declared these letters unconstitutional is now requiring compliance with them," Opsah said on Friday.

Illston's May 20 order omits any mention of Google or that the proceedings have been closed to the public. But the judge said "the petitioner" was involved in a similar case filed on April 22 in New York federal court.

Public records show that on that same day, the federal government filed a "petition to enforce National Security Letter" against Google after the company declined to cooperate with government demands.

Google can still appeal Illston's decision. The company declined comment Friday.

In 2007, the Justice Department's inspector general found widespread violations in the FBI's use of the letters, including demands without proper authorization and information obtained in non-emergency circumstances. The FBI has tightened oversight of the system.

The FBI made 16,511 national security letter requests for information regarding 7,201 people in 2011, the latest data available.

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Ill. passes nation’s toughest fracking regulations

Friday, May 31st, 2013 | Finance News

SPRINGFIELD, Ill. (AP) — Illinois came a giant step closer to approving the nation's strictest regulations for high-volume oil and gas drilling on Friday, as lawmakers approved a measure they hoped would create thousands of jobs in economically depressed areas of southern Illinois.

The Senate passed the legislation 52-3, one day after it was overwhelmingly approved in the other chamber. Gov. Pat Quinn promised to sign it, calling the legislation a "shot in the arm for many communities."

The legislation was crafted with the help of industry and some environmental groups — an unusual collaboration that has been touted as a potential model for other states.

Legislation sponsor Mike Frerichs, a Champaign Democrat, said stakeholders "sat down for hundreds and thousands of hours" to hammer out the issue.

"These are tough regulations that are going to protect and preserve our most valuable resources in our state," he told floor members. "We are going to increase home produced energy in our state in one of the most environmentally friendly ways possible."

While proponents have said hydraulic fracturing, or "fracking," would generate tens of thousands of jobs, opponents have been pushing for a two-year moratorium to allow more time to examine health and environmental impact. They are worried fracking could cause pollution and deplete water resources.

"This bill was written by industry and parties that have a vested interest," said Annette McMichael, a property owner in Johnson County who belongs to a coalition that opposes fracking. "We have no say in our own water. ... We are totally helpless."

Despite the numerous protests by her group, Southern Illinoisans Against Fracturing Our Environment, and others — one woman was forcibly removed from the House chamber on Thursday after the vote — there was little opposition to the measure on the floor. Senators on both sides of the aisle praised the compromise.

"This could be a bright economic future for many, many Illinoisans," said Sen. Kirk Dillard, a Hinsdale Republican.

Fracking uses high-pressure mixtures of water, sand or gravel and chemicals are used to crack rock formations deep underground and release oil and natural gas.

Among the provisions in the proposed legislation are requirements that drillers publicly disclose the chemicals they use and that they test water before and after fracking. Companies also would be liable for any water pollution.

Sen. Mattie Hunter, who was among the few who voted against the legislation, said in a statement that the state should "halt fracking practices and allow for a task force to complete concrete, comprehensive evaluation of this highly controversial industry moving further." The Chicago Democrat had introduced a measure that would put a temporary ban on the practice.

Sen. Sue Rezin, a Morris Republican described the legislation as having "the highest environmental regulations in the entire country."

Energy companies are eyeing the New Albany shale formation in southern Illinois, where they believe there are significant oil reserves 5,000 feet or more below the surface.

While the measure passed easily in both chambers, the road there wasn't easy. An amendment requiring energy companies to hire a state-licensed water well driller delayed the vote for more than a month before industry and unions reached a compromise that gives drillers a break on extraction taxes if at least half of their employees are from Illinois.

Two bills proposing a moratorium were offered, but neither gained traction.

Opponents say the regulatory legislation would leave Illinois communities with no control over the practice.

But others felt it was the best the state could do. State Sen. Don Harmon, an Oak Park Democrat said it was "about as good of a regulatory bill as we could offer."

"God willing," Harmon said, "it's good enough."

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The bill is SB1715.

Online: http://www.ilga.gov

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Associated Press writer Sophia Tareen contributed to this report.

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