Authorities launched an investigation into the
marketing and selling of mutual funds — which are popular with small
investors across America — eighteen months ago.
A number of banks have already been fined for a
practice known as market-timing, in which institutions make short term
trades to the detriment of long-term investors.
Last week, the Securities and Exchange Commission
(SEC) handed out civil fines worth $20m and $40m respectively to
Citigroup, the world's largest financial services company and Putnam
Investments, a subsidiary of Marsh & McLennan.
In a connected move, the National Association of
Securities Dealers said Citigroup, American Express and JP Morgan
Chase had agreed to pay $21.25m in total for alleged violations in the
sale of mutual funds.
The SEC said Citigroup failed to tell customers
buying mutual funds through its Smith Barney retail unit that it only
marketed funds which offered incentive payments in return for being
The watchdog also alleged that Citigroup
recommended and sold funds offering a lower level of return to
investors because they delivered higher levels of sales commission.
UK REBATE 'UNJUSTIFIED', SAYS CHIRAC
French president Jacques Chirac has called the UK's
£3bn rebate from the European Union "unjustified".
Speaking after a summit meeting he said unless it
was put up for discussion the EU would never be able to reach
agreement on its medium term finances.
Earlier Foreign Secretary Jack Straw said the UK
was prepared to veto any bid to reduce the rebate secured by Margaret
Thatcher in 1984.
He said it remained justified because less EU farm
money came to the UK.
Mr Chirac told reporters in Brussels: "One can
only have a reasonable budgetary balance if we put back on the table
the British cheque. It can no longer be justified. It was from the
But a UK Government official responded: "Even
with the rebate, the UK pays two and a half times more than France
contributes to the EU budget. Without it we would pay 14 times as much
"There can be no deal on future financing
which does not protect the rebate."
The 25-member EU is gearing up for tough
negotiations on its budget plans for the period 2007-2013, with the
bloc's Luxembourg presidency hoping to strike a deal at a June summit.
Earlier Conservative Graham Brady said the rebate
was a "crucial test" of how firmly ministers were prepared
to stand up for Britain.
EU Commission president Jose Manuel Barroso has
indicated he wants the rebate to come to an end.
Mr Straw said that as well as the veto over the
rebate the UK wanted to keep a tight rein on national contributions.
EU AGREES TO REFORM SERVICES PLAN
European Union leaders have agreed on the need for
a "far reaching" revision of controversial proposals to free
up Europe's huge services sector.
French President Jacques Chirac earlier told an EU
summit in Brussels that the planned changes were
It follows fears the plans may endanger workers'
rights and lead to job losses.
Mr Chirac could face a humiliating loss in France's
29 May referendum on the EU constitution, with the No vote fuelled by
protests over the services proposal.
EU leaders announced they would seek to rewrite
plans to liberalise Europe's services sector shortly after Mr Chirac
voiced his opposition.
TORIES UNVEIL PLANS FOR ECONOMY
A Tory government would bring spending under
control and safeguard the Bank of England's independence, said party
leader Michael Howard.
Only the Conservatives could stop control of
interest rates being handed to the European Central Bank, he said.
They would bring spending under control and use
money saved to keep taxes down and repay borrowing, he said.
Labour says the Tories plan £35bn spending
"cuts". The Lib Dems say taxes will rise whoever wins the
Mr Howard said the Conservatives were the only
party which would not adopt the euro — so only his party could
guarantee the Bank of England's independence.
He also said the country could not keep spending
more than it was earning, and the government must learn to live within
PUTIN 'HALTS' PRIVATISATION PROBE
Russian President Vladimir Putin has told business
chiefs there will be no more reviews of the privatisations of the
1990s that made many of them rich.
At a rare meeting with industrialists at the
Kremlin last Thursday, he vowed to "help the business
community" by guaranteeing property rights.
There have been increasing jitters over the
business climate in the wake of the Kremlin break up of oil giant
Analysts welcomed the move, saying it could help
revive investment in Russia.
Mr Putin backed a proposed new law that will exempt
property privatisations which took place more than three years ago
from future criminal inquiries.
Such a move would safeguard the empires of many of
the so-called oligarchs, who made billions in the post-Soviet era by
buying state assets at knockdown prices.
HIGH OIL PRICES HIT JAPAN EXPORTS
Japan's trade surplus fell in February, the second
month in succession it has fallen compared with a year earlier.
Economists blamed the decline on the recent surge
in oil prices, which increased the value of imports into the country.
Yet exports were also weak.
Official Japanese data showed that the surplus fell
21.7% in February to 1.093 trillion yen ($10.36bn; £5.49bn).
However, February's trade surplus decline was less
than the 60% drop recorded by Japan in January.
Japanese exports, in value terms, rose 1.7%
year-on-year in February, driven by the automotive and steel sectors,
but this rise was substantially less than the double-figure percentage
growth seen last year.
In terms of volume, Japan's exports actually fell
4.3% year-on-year, with a 6.7% decline to Europe and a 3.6% fall to
EU RULES 'WON'T STOP UK SPENDING'
Chancellor Gordon Brown has said he is determined
to stick to his plans to expand public investment even if they breach
EU limits on budget deficits.
But he denied that he was ruling out British
membership of the euro despite saying there would be no assessment of
the five economic tests this year.
Mr Brown said that it was vital the UK continued to
invest in infrastructure, science, and education in the future.
Otherwise it would be overtaken by the likes of
China, he told MPs.
The chancellor said that the EU's planned changes
in the growth and stability pact — designed to ensure that countries
in the euro zone do not borrow too much — would force Britain to run
a budget surplus of 1% over the economic cycle.
EU URGED TO KEEP CHINA ARMS BAN
More than 500 Chinese human rights activists have
sent an open letter to the European Union urging it not to lift its
arms embargo on China.
The arms ban was imposed in 1989 after Beijing's
bloody suppression of the protests in Tiananmen Square.
EU foreign policy chief Javier Solana says the
embargo is unfair, as there has been some progress on human rights.
But the US wishes to keep the ban and the UK seems to be taking a
INDIA BANK STAFF IN STRIKE ACTION
Nearly a million bank workers in India have taken
part in a one-day strike, last week, in protest at reforms which
unions believe will lead to job cuts.
The government has been encouraging 27 state-run
banks to merge in order to compete better in the global economy.
Unions say the move will result in the closure of
22,000 branches nationwide.
About 50,000 staff at foreign and some private
banks did work, but trading volumes on the foreign exchange market
UK BRIBERY LOOPHOLES CRITICISED
Significant loopholes exist in the UK's fight
against bribery and corruption, a new report warns.
The report from the Organisation for Economic
Co-Operation and Development says there are too many organisations in
the UK tasked to deal with bribery.
None of them, it warns, have sufficient resources
to deal with UK companies which bribe foreign officials.
While two cases are being investigated and 11 are
under review, not a single person or firm has been prosecuted.
TEXAS OIL PLANT BLAST 'KILLS 14'
A huge explosion at an oil refinery in Texas has
killed at least 14 people and injured more than 100.
The blast at the Texas City plant, which belongs to
Britain's BP, shook buildings five miles (8km) away.
Sections of the plant were reduced to cinders and
The refinery, the third-biggest in the US,
processes 3% of the country's oil supply.
An inquiry into the cause of the blast is under
way. Investigators say terrorism is not their main focus.
The refinery has had safety problems in the past.
In March last year, it was evacuated after an explosion that cost the
company $63,000 in fines.
EUROPE AND AFRICA WARNED OVER TB
Tuberculosis has reached alarming proportions in
Africa, with a third of global TB deaths occurring there, says the
World Health Organization.
While most areas of the world have seen a 20% drop
in TB since 1990, rates in Africa have tripled, a WHO report says.
The rise continues, fuelled by high rates of
HIV/Aids and poor healthcare, and now a third of the 1.7 million TB
deaths a year occur in Africa. In Eastern Europe, drug resistance is
to blame, the WHO says.
GM WARNS IT MAY PHASE OUT BRANDS
General Motors has said it may phase out one of its
weaker car brands if sales fail to meet targets.
The US giant's vice chairman Bob Lutz did not say
which brand might be discontinued, but described Buick and Pontiac as
His comments come a week after falling sales
prompted General Motors (GM) to announce a profits warning.
GM expects its earnings for 2005 to be down by as
much as 80%, as it struggles to turn its fortunes around.
UK supermarket Sainsbury's has reported higher
sales after supply improvements made more goods available for
It said like-for-like sales had increased 3.7%
during the 12 weeks to 26 March against a year earlier, while sales
excluding petrol were up 1.7%.
US INTEREST RATES CLIMB TO 2.75%
US interest rates have continued to climb as the
Federal Reserve raised its benchmark borrowing cost by a quarter of a
percentage point to 2.75%.
The increase is the seventh time the Fed has
tweaked rates since last June.
Despite saying that inflationary pressures had
increased, the Fed said it would keep its "measured" pace of
interest rate increases.
Analysts had voiced concerns that price pressures
may prompt the Fed to take a more aggressive stance on future hikes.
BUSH WANTS ADAMS FOR TREASURY JOB
US President George W. Bush has nominated Tim Adams
to the senior US Treasury position of under secretary for
Mr Adams, a former chief of staff at the Treasury,
was most recently policy adviser to Bush's re-election campaign.
His new role, which requires Senate confirmation,
is the Treasury's most senior international position and he will play
a key part in dollar policy.
Mr Adams will replace John Taylor, who is to step
down on 22 April.
In his new position, he will have a voice at the
International Monetary Fund and World Bank.
MOBILE GROWTH 'FASTEST IN AFRICA'
Mobile phone use in Africa is growing faster than
anywhere else in the world, according to a report.
The study, backed by the UK mobile phone giant
Vodafone, said African countries with greater mobile use had seen a
higher rate of economic growth.
The report, supported by the Centre for Economic
Policy Research, studied the social and economic impact of mobiles.
Small businesses in South Africa rely on mobiles,
the report said, while Nigeria's market is doubling annually.
GLOOMY MONTH FOR MANUFACTURERS
UK manufacturers are struggling to bring in
business, with orders falling at a sharper rate in March than in
The CBI's latest monthly industrial trends report
showed a fall in the total order balance to 13 in March from — 10 in
the previous month.
Businessmen blamed high oil prices and slower
This latest report indicates that the revival in
confidence seen in February was just temporary.
Consumer spending dipped sharply in the final
quarter of last year, putting pressure on industry.
Separate figures from the Office for National
Statistics show that household spending rose by just 0.2% in the
fourth quarter, compared with a 0.7% growth rate in the previous