UBS Immunity, PG&E Pipeline Charges, BofA Suit: Compliance

(Updates with ex-Michaels Stores founders in Courts. To be sent this column daily, click SALT COMPRPT.)

April 3 (Bloomberg) — UBS AG is poised to receive immunity from European Union currency-rigging fines after it was the first to approach regulators in the probe, according to a person with knowledge of the case.

UBS, which avoided a 2.5 billion-euro ($3.45 billion) penalty in the EU’s Libor probe, was again first to cooperate in the currency investigation, said the person, who asked not to be identified because the process is confidential. The move is likely to spark a backlash from critics who say the bank has received enough forgiveness.

Authorities on three continents are investigating whether traders at some of the world’s largest banks sought to manipulate the WM/Reuters currency rates. UBS has suspended at least five foreign-exchange traders as part of its own probe.

A UBS spokesman declined to comment. A spokesman for Competition Commissioner Joaquin Almunia declined to comment on the EU’s preliminary investigation.

A decision on whether the bank will receive full immunity won’t be made until the end of the investigation, after regulators review the level of cooperation. EU immunity wouldn’t enable UBS to escape fines from the U.K. Financial Conduct Authority or some of the U.S. authorities that don’t grant immunity.

Courts

Wylys’ Decade-Long $550 Million Insider Case Finally Sees a Jury

A $550 million U.S. government insider-trading lawsuit against Texas entrepreneurs Samuel and Charles Wyly has gone on so long that one of the accused has since died and his estate is now a defendant.

Former Michaels Stores Inc. Chairman Samuel Wyly, the surviving defendant, and his brother’s estate are set to go to trial today in Manhattan federal court in a suit that has been pending for four years following a six-year investigation.

The brothers, co-founders of the arts-and-crafts retailer, used a “labyrinth” of offshore trusts and subsidiaries to trade securities of four public companies on whose boards they sat, according to the Securities and Exchange Commission.

The brothers have denied the allegations, saying the transactions were disclosed in public SEC filings and the offshore trusts were created for tax planning purposes and to protect their assets.

William A. Brewer III, a lawyer for the Wylys, didn’t respond to a message seeking comment on the case.

The case is SEC v. Wyly, 10-cv-05760, U.S. District Court, Southern District of New York (Manhattan).

PG&E Charged by U.S. Over Pipeline Explosion That Killed Eight

PG&E Corp. was charged with 12 pipeline safety violations by the U.S. government for a 2010 natural gas explosion that killed eight people.

In an indictment filed April 1 in federal court in San Francisco, the company was charged with knowingly and willfully violating the Natural Gas Pipeline Safety Act by failing to test and assess unstable pipelines to determine whether they could fail.

“We’ve taken accountability and are deeply sorry,” PG&E Chairman and Chief Executive Officer Tony Earley said in an e- mail April 1. “We have worked hard to do the right thing for victims, their families and the community and we will continue to do so.”

Greg Snapper, a PG&E spokesman, had no immediate comment on the charges. The company said in a regulatory filing last week that it expected the charges after discussions with the San Francisco U.S. Attorney’s Office about a settlement broke down.

The case is U.S. v. Pacific Gas & Electric Co., 14- cr-00175, U.S. District Court, Northern District of California (San Francisco).

BofA Told It Should Face SEC Suit Over Mortgage Securities

Bank of America Corp. should face U.S. Securities and Exchange Commission claims over $855 million in mortgage-backed securities, U.S. Magistrate Judge David Cayer recommended April 1 in Charlotte, North Carolina.

The complaint adequately alleged a failure by the bank to disclose in offering documents that the bulk of the underlying mortgages were bought wholesale from third-party brokers, Cayer said.

He earlier found that a Justice Department suit over the same securities should be thrown out. Cayer’s findings in both cases will be reviewed by a district court judge, after which either party can appeal.

The cases are Securities and Exchange Commission v. Bank of America Corp., 13-cv-00447, and U.S. v. Bank of America Corp., 13-cv-00446, U.S. District Court, Western District of North Carolina (Charlotte).

Interviews/Commentary

BOE’s Bailey Says Bankers Should Defer Bonuses Longer

Bankers should defer bonus payouts for more than the regulatory minimum of three years, Andrew Bailey, the U.K’s top banking supervisor, said in an interview with ITV News.

“We need a longer period, because we know from experience that problems” at banks can “emerge with longer delays,” said Bailey, chief executive officer of the Prudential Regulation Authority and a deputy governor of the Bank of England.

–With assistance from Gaspard Sebag in Brussels, Karen Gullo in federal court in San Francisco, Edvard Pettersson in Federal court in Los Angeles, Ben Moshinsky in London and Patricia Hurtado in Federal Court in Manhattan.

To contact the reporter on this story: Carla Main in New York at [e-mail] To contact the editors responsible for this story: Michael Hytha at [e-mail] Stephen Farr