February 23, 2024

British Group Criticizes European Transaction Tax Plan

LONDON — A European tax on financial transactions would fall disproportionately on London firms, a business lobbying group said Thursday, highlighting growing tensions between Britain and its continental allies over banking regulation.

The British government started legal action last month to try to block the European Union’s so-called Robin Hood tax on the grounds that it could ensnare banks from countries that do not adopt the law, including Britain and even the United States. At issue is a clause in the proposal under which the tax would be applied to trades by banks from European countries that sign on to the law, like Germany or France, regardless of where the transaction actually takes place.

The British Treasury says that, for example, were an American bank to trade a British government bond with the London branch of a German bank, then both the U.S. and German banks could be liable for the tax.

A report published Thursday by the London Chamber of Commerce and Industry identified the tax as a problem area of European Union policy, along with employment regulation.

In a survey of 130 London businesses of different sizes and from various sectors, 52 percent said they believed that it was not desirable for Britain to remain in the union under the current terms. But 60 percent favored staying if powers could be transferred from Brussels back to national governments. That is broadly the policy preferred by Prime Minister David Cameron, who has promised to hold a referendum on European Union membership.

The report Thursday said the union’s drive to strengthen the regulation of financial services after the crash had produced “legislative proposals that are particularly damaging for London’s financial services industry.”

The proposed transaction tax “would affect London disproportionally as it is a major hub for euro trading,” it added.

The tax has joined a growing list of financial issues dividing the Continent and the British government. Britain says the country needs a looser relationship with the bloc if it is to stay a member.

Under the proposal, a tax would be imposed of at least one-tenth of 1 percent of the value of all transactions between financial institutions. Derivatives contracts would be taxed at the rate of one-hundredth of 1 percent. The European Commission has estimated the tax could raise 30 billion euros to 35 billion euros, or $39 billion to $46 billion, a year.

Britain refused to sign on to the proposal. But 11 other European Union nations agreed to go ahead: France, Germany, Belgium, Austria, Slovenia, Portugal, Greece, Slovakia, Italy, Spain and Estonia. Transactions would be taxed if there were “an established economic link” between a financial institution and the group of 11 nations — the so-called Financial Transaction Tax-zone, or F.T.T. That would include branches of banks operating outside the zone.

Last month, the British government decided to challenge the tax in Europe’s highest court, the European Court of Justice, even though no detailed agreement was in place among those countries that wanted to implement it.

Emer Traynor, spokeswoman for the European commissioner for taxation, Algirdas Semeta, said she was “fully confident that the F.T.T. as proposed is legally robust. It is fully in line with international tax laws and broad principles already widely used.”

The tax is just one of several disputes between Britain and the European Union about financial services. Earlier this year Britain found itself isolated over moves to cap bankers’ bonuses. Britain has a separate legal challenge against the European Central Bank over its plans to prevent some euro-denominated securities from being cleared outside the 17 European Union countries that share the euro — in that way excluding Britain, which has kept its own currency.

The British government is also resisting new rules to rehabilitate troubled banks, which would mean creating national funds to pay for bank resolution costs. And a long-standing plan to harmonize the base on which corporate tax is levied in Europe is also a point of contention between Britain and Brussels.

Tension with Brussels has grown during an economic crisis seen by many continental Europeans as the product of freewheeling financial services. The result was pressure for tougher regulation and, in the case of the Robin Hood tax, measures to recoup cash from the industry. The euro zone’s debt crisis is also forcing the 17 European Union countries that use the currency to integrate more closely in areas like banking, raising issues for member states outside the monetary union.

“On the one hand it shows the dangers of disengaging from the E.U.,” said Philip Whyte, senior research fellow at the Center for European Reform, a research institute in London, who argues that Britain feels increasingly beleaguered on issues related to financial services.

“At the same time, it gives a lot of ammunition to those saying that the E.U. is a hostile force to Britain. ‘Let’s get out and develop closer links with faster-developing parts of the world economy.’ ”

Article source: http://www.nytimes.com/2013/05/03/business/global/03iht-eulondon03.html?partner=rss&emc=rss

‘Crowdfunding’ Rules Are Unlikely to Meet Deadline

The “game changer,” as President Obama put it in the Rose Garden as he signed the bill, was a provision to let small companies “crowdfund” — that is, sell stock and other securities over the Internet directly to the public. “For the first time,” the president said, “ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”

But it now seems that dawn will break late on this new age of democratic investing. The Securities and Exchange Commission appears certain to miss its end-of-year deadline for issuing regulations to put the provision into effect. And with the departure of the S.E.C. chairwoman, Mary L. Schapiro, and three of her top deputies — including two who manage the offices writing the regulations — some in the nascent equity crowdfunding industry worry that it could be 2014 before their line of business becomes legal.

The delay has frustrated many crowdfunding backers. The 270 days that Congress gave the S.E.C. to write the rules “is not a suggested timeline; it is a Congressional mandate,” said Kim Wales, an organizer at Crowdfund Intermediary Regulatory Advocates, a lobbying group formed in April to represent the new industry, in an e-mailed statement. “The S.E.C. answers to Congress, not the other way around.”

The crowdfunding provision, Title III of the Jumpstart Our Business Startups Act, creates an exception to the general rule that before a company can sell its stock to the public, it must register with the S.E.C., a process of disclosure requiring elaborate and expensive assistance from lawyers, accountants and investment bankers that most small companies cannot afford. Instead, businesses seeking less than $1 million will be able to raise capital online from small investors in a streamlined process.

But the law insists on strong investor protections, and as a result, the S.E.C. must iron out numerous issues concerning how crowdfunding companies, the intermediaries handling the transactions and even investors themselves can operate.

Small businesses, especially start-ups, are notoriously risky; in essence, the S.E.C. is writing rules that will govern a very dangerous game. “It’s actually a significant job to do the regulations in this area, so it was an unrealistic expectation that the S.E.C. would have it completed by now,” said Barbara Roper, director of investor protection for the Consumer Federation of America, which is lobbying the agency on other aspects of the Jobs Act. “I think they have 21 or 22 separate regulations to write.”

S.E.C. employees began accepting comments from and arranging meetings with interested members of the public about crowdfunding shortly after the Jobs Act became law. In those meetings, agency officials “have come in with our white papers fully highlighted, line by line, to discuss it,” said Alon Hillel-Tuch, co-founder and chief financial officer at RocketHub, a crowdfunding site that lets people and businesses raise money through donations or by offering rewards. (Current law allows sites to accept donations or deposits on a product.)

A spokeswoman for Senator Jeff Merkley, an Oregon Democrat who largely wrote the crowdfunding measure, said that the S.E.C. was grappling with the more stringent requirements courts had imposed for conducting cost-benefit analyses when writing regulations. This “has slowed down everything from Dodd-Frank to the Jobs Act,” the spokeswoman, Courtney Warner Crowell, said in an e-mail.

With data for analyzing equity crowdfunding in short supply, the S.E.C. asked RocketHub and Indiegogo, another donation-based crowdfunding service, to provide information about their operating practices and campaigns they had conducted. RocketHub complied, Mr. Hillel-Tuch said. But Indiegogo did not, said Slava Rubin, the company’s chief executive, because it did not want to share trade secrets.

Mr. Hillel-Tuch said S.E.C. officials also requested help from Kickstarter, another leading crowdfunding site. Officials spoke with a Kickstarter executive in July, but neither the agency nor Kickstarter would comment on the meeting.

Under Title III, companies wishing to sell stock to the public will have to provide information to investors and the S.E.C., including financial disclosures that grow more extensive as the size of the offerings increases. They will be allowed to sell stock only through an intermediary: either a broker-dealer or a specialized crowdfunding Web site, or portal. The intermediaries will have to take steps to ensure that small investors are protected, even from themselves. The law limits how much a person can invest in crowdfunding in a year, depending on income and net worth.

Advocates for both investors and members of the crowdfunding industry have dissected nearly every element of the legislation. “I think there are probably 25 or 30 legitimately important issues,” said Douglas S. Ellenoff, a New York securities lawyer who is advising some in the industry. “But I think they’ve all been hashed out. They have heard issues from a variety of angles, and I think that the draft proposals are fairly advanced.”

High on the list of priorities for the portals is to make sure they face less scrutiny from regulators than broker-dealers do. “What we’re asking for is the funding portals are viewed as sort of a broker-dealer-lite sort of model, where the mandates for broker-dealers are not imposed on a funding portal,” said Ms. Wales, the crowdfunding lobbyist.

Article source: http://www.nytimes.com/2012/12/27/business/smallbusiness/why-the-sec-is-likely-to-miss-its-deadline-to-write-crowdfunding-rules.html?partner=rss&emc=rss

Why S.E.C. Is Likely to Miss Deadline on Rules for Crowdfunding

The “game changer,” as President Obama put it in the Rose Garden as he signed the bill, was a provision to allow small companies to “crowdfund” — that is, to sell stock and other securities over the Internet directly to the general public. “For the first time,” the president said, “ordinary Americans will be able to go online and invest in entrepreneurs that they believe in.”

But it now seems that dawn will break late on this new age of democratic investing. The Securities and Exchange Commission appears certain to miss its end-of-year deadline for issuing regulations to put the provision into effect. And with the departure of the S.E.C. chairwoman, Mary L. Schapiro, and three of her top deputies — including two who manage the offices writing the regulations — some in the nascent equity crowdfunding industry worry that it could be 2014 before their line of business becomes legal.

The delay has frustrated many crowdfunding backers. The 270 days that Congress gave the S.E.C. to write the rules “is not a suggested timeline; it is a Congressional mandate,” said Kim Wales, an organizer at Crowdfund Intermediary Regulatory Advocates, a lobbying group formed in April to represent the new industry, in an e-mailed statement. “The S.E.C. answers to Congress, not the other way around.”

The crowdfunding provision, Title III of the Jumpstart Our Business Startups Act, creates an exception to the general rule that before a company can sell its stock to the public, it must register with the S.E.C., a process of disclosure requiring elaborate and expensive assistance from lawyers, accountants and investment bankers that most small companies cannot afford. Instead, businesses seeking less than $1 million will be able to raise capital online from small investors in a streamlined process.

But the law insists on strong investor protections, and as a result, the S.E.C. must iron out numerous issues concerning how crowdfunding companies, the intermediaries handling the transactions and even investors themselves can operate.

Small businesses, especially start-ups, are notoriously risky; in essence, the S.E.C. is writing rules that will govern a very dangerous game. “It’s actually a significant job to do the regulations in this area, so it was an unrealistic expectation that the S.E.C. would have it completed by now,” said Barbara Roper, director of investor protection for the Consumer Federation of America, which is lobbying the agency on other aspects of the Jobs Act. “I think they have 21 or 22 separate regulations to write.”

S.E.C. employees began accepting comments from and arranging meetings with interested members of the public about crowdfunding shortly after the Jobs Act became law. In those meetings, agency officials “have come in with our white papers fully highlighted, line by line, to discuss it,” said Alon Hillel-Tuch, co-founder and chief financial officer at RocketHub, a crowdfunding site that lets people and businesses raise money through donations or by offering rewards. (Current law allows sites to accept donations or deposits on a product.)

A spokeswoman for Senator Jeff Merkley, an Oregon Democrat who largely wrote the crowdfunding measure, said that the S.E.C. was grappling with the more stringent requirements courts had imposed for conducting cost-benefit analyses when writing regulations. This “has slowed down everything from Dodd-Frank to the Jobs Act,” the spokeswoman, Courtney Warner Crowell, said in an e-mail.

With meaningful data for analyzing equity crowdfunding in short supply, the S.E.C. asked RocketHub and Indiegogo, another donation-based crowdfunding service, to provide information about their operating practices and campaigns they had conducted. RocketHub complied, Mr. Hillel-Tuch said. But Indiegogo did not, said Slava Rubin, the company’s chief executive, because it did not want to share trade secrets.

Mr. Hillel-Tuch said S.E.C. officials also requested help from Kickstarter, another leading crowdfunding site. Officials spoke with a Kickstarter executive in July, but neither the agency nor Kickstarter would comment on the meeting.

Under Title III, companies wishing to sell stock to the public will have to provide information to investors and the S.E.C., including financial disclosures that grow more extensive as the size of the offerings increases. They will be allowed to sell stock only through an intermediary: either a broker-dealer or a specialized crowdfunding Web site, or portal. The intermediaries will have to take steps to ensure that small investors are protected, even from themselves. The law sets a cap on how much a person can invest through crowdfunding in a year, depending on income and net worth.

Advocates for both investors and members of the crowdfunding industry have dissected nearly every element of the legislation. “I think there are probably 25 or 30 legitimately important issues,” said Douglas S. Ellenoff, a New York securities lawyer who is advising some in the industry. “But I think they’ve all been hashed out. They have heard issues from a variety of angles, and I think that the draft proposals are fairly advanced.”

High on the list of priorities for the portals is to make sure they face less scrutiny from regulators than broker-dealers do. “What we’re asking for is the funding portals are viewed as sort of a broker-dealer-lite sort of model, where the mandates for broker-dealers are not imposed on a funding portal,” said Ms. Wales, the crowdfunding lobbyist.

Article source: http://www.nytimes.com/2012/12/27/business/smallbusiness/why-the-sec-is-likely-to-miss-its-deadline-to-write-crowdfunding-rules.html?partner=rss&emc=rss

Wheels: For Marchionne and Winterkorn, a Parisian Showdown Is Averted

A dispute at the highest levels of the principal lobbying group for Europe’s automotive industry was resolved with a handshake on Friday, as Sergio Marchionne, the chief executive of Fiat and Chrysler, met with Martin Winterkorn, chief executive of Volkswagen, on the convention floor at the Paris motor show.

Sergio Marchionne, on Thursday in Paris.Corentin Fohlen for The International Herald Tribune Sergio Marchionne, on Thursday in Paris.

Mr. Marchionne, the head of the European Automobile Manufacturers’ Association, was criticized by Volkswagen executives for comments made to The New York Times in July, in which the Fiat chief took issue with deep discounts offered by the German brand in Europe. Mr. Marchionne and other executives accused VW of creating a market climate in which frenzied price-cutting jeopardized margins. The Fiat chief characterized the environment as a “bloodbath.”

Martin Winterkorn, on Wednesday at the preview event for the VW Group.Eric Piermont/Agence France-Presse — Getty Images Martin Winterkorn, on Wednesday at the preview event for the VW Group.

Fiat, PSA Peugeot Citroën, Ford Motor and the Opel and Vauxhall divisions of General Motors project significant losses in Europe for the year as they try to address overcapacity at their plants.

In July, Volkswagen said it was prepared to leave the lobbying group, saying Mr. Marchionne was not qualified to lead it. As Automotive News reported on Thursday, Mr. Marchionne issued a challenge to VW that sounded as if it was lifted from Hopalong Cassidy:

“If Volkswagen, through its chief executive, thinks that it needs to do something, tell them to show up tomorrow morning at 7 o’clock at our stand,” Mr. Marchionne told reporters.

Automotive News and Bloomberg reported that on Friday morning in Paris, having adjourned from a meeting of the lobbying group held at the Fiat stand, the two executives met and shook hands, saying the dispute was resolved.

“We’ve cleared it,” Mr. Marchionne said of the spat in a video interview after he and Mr. Winterkorn acknowledged they remained “good friends.”

Article source: http://wheels.blogs.nytimes.com/2012/09/28/for-marchionne-and-winterkorn-a-parisian-showdown-is-averted/?partner=rss&emc=rss