Latest news with #CliffordChance
The Star
4 days ago
- Business
- The Star
Citi reverses trader firing after five years
Terms of the settlement weren't disclosed. — Bloomberg TOKYO: Citigroup Inc revoked the firing of a senior trader in Japan as part of a wrongful dismissal settlement following years of wrangling over problematic trading practices in the bank's Asia unit. Ken Ohtaka's dismissal was rescinded after the two sides reached an agreement last month, according to a copy of the settlement seen by Bloomberg News. Ohtaka, Citigroup's ex-Japan agency trading head in Tokyo, rejected a confidentiality clause in the settlement so that he can talk openly about what he describes as a 'global witch hunt in search of scapegoats' that triggered several firings. The internal probe launched in 2018 by law firm Clifford Chance was 'flawed', and its outcome felt 'predetermined' in order to pin the blame for questionable practices on a group of Asia equity sales traders, Ohtaka said in a phone interview. Ohtaka 'suffered great mental distress as a result of being unilaterally fired by the defendant without any disciplinary reason', according to court filings for his wrongful dismissal lawsuit. Terms of the settlement weren't disclosed. Citigroup said the bank took appropriate action in line with procedures when personal conduct failed to meet its high standards. 'All Citi investigations are conducted based on facts and evidence, with assistance from independent experts as needed,' a Hong Kong-based spokesperson said in an email. The bank 'has implemented significant remedial measures to strengthen our compliance and internal controls to address this legacy issue, and continues to enhance its processes to reflect best market practices and to meet regulatory expectations'. Clifford Chance in Hong Kong said the firm doesn't comment on client matters. Hong Kong Probe Ohtaka's settlement is the latest chapter in a saga that began when Hong Kong's securities regulator found that traders in Citigroup's Asia markets division had at times misrepresented the bank's own stock positions on trades as client interest for more than a decade. In essence, the regulator concluded, they had indicated there was customer demand to buy and sell specific stocks when it didn't exist. The Securities and Futures Commission (SFC) said that the 'pervasive dishonest behaviour' went as far back as 2008. The regulator faulted Citigroup for internal control deficiencies and poor management oversight, and fined it about US$45mil. After the SFC began reviewing the trades, Citigroup launched its own probe, just months after Ohtaka joined the firm in 2018. — Bloomberg
Malaysian Reserve
4 days ago
- Business
- Malaysian Reserve
Citi reverses course on firing of Japan trader five years on
CITIGROUP Inc. revoked the firing of a senior trader in Japan as part of a wrongful dismissal settlement following years of wrangling over problematic trading practices in the bank's Asia unit. Ken Ohtaka's dismissal was rescinded after the two sides reached an agreement last month, according to a copy of the settlement seen by Bloomberg News. Ohtaka, Citigroup's ex-Japan agency trading head in Tokyo, rejected a confidentiality clause in the settlement so that he can talk openly about what he describes as a 'global witch hunt in search of scapegoats' that triggered several firings. The internal probe launched in 2018 by law firm Clifford Chance was 'flawed,' and its outcome felt 'predetermined' in order to pin the blame for questionable practices on a group of Asia equity sales traders, Ohtaka said in a phone interview. Ohtaka 'suffered great mental distress as a result of being unilaterally fired by the defendant without any disciplinary reason,' according to court filings for his wrongful dismissal lawsuit. Terms of the settlement weren't disclosed. Citigroup said the bank took appropriate action in line with procedures when personal conduct failed to meet its high standards. 'All Citi investigations are conducted based on facts and evidence, with assistance from independent experts as needed,' a Hong Kong-based spokesperson said in an email. The bank 'has implemented significant remedial measures to strengthen our compliance and internal controls to address this legacy issue, and continues to enhance its processes to reflect best market practices and to meet regulatory expectations.' Clifford Chance in Hong Kong said the firm doesn't comment on client matters. Hong Kong Probe Ohtaka's settlement is the latest chapter in a saga that began when Hong Kong's securities regulator found that traders in Citigroup's Asia markets division had at times misrepresented the bank's own stock positions on trades as client interest for more than a decade. In essence, the regulator concluded, they had indicated there was customer demand to buy and sell specific stocks when it didn't exist. The Securities and Futures Commission said that the 'pervasive dishonest behaviour' went as far back as 2008. The regulator faulted Citigroup for internal control deficiencies and poor management oversight, and fined it about $45 million. After the SFC began reviewing the trades, Citigroup launched its own probe, just months after Ohtaka joined the firm in 2018. The review eventually led to Ohtaka's firing in late 2020, following the dismissal of a dozen traders in Hong Kong and Singapore the previous year. In Tokyo, six traders either quit on their own or were given the option to resign to avoid being fired, according to Ohtaka. Four others were disciplined, resulting in bonus cuts, he said. The bank declined to comment on specific cases. Ohtaka, 58, was among several former employees who sued the bank over their dismissals. Ian Weir, an ex-sales trader for Asia-Pacific markets based in London, agreed to settle his case before a London tribunal in October. Citi denied in its submissions to the tribunal that Weir was unfairly dismissed. In December, former equity sales trader Cindy Lui won her wrongful dismissal suit before Hong Kong's Labour Tribunal. During the probe by Hong Kong regulators, Ohtaka said he assured his Japan team that they had fully complied with local financial regulations and internal bank policies, and that the inquiry shouldn't extend to Tokyo. In the midst of the probe, he was appointed chair of Citigroup Global Markets Japan's execution governance committee. He said he tightened equity-execution rules, including revising several operational protocols to better protect clients and staff. The Hong Kong office rejected some of the measures as too restrictive and growth-stifling, Ohtaka said. The bank declined to comment on the alleged Hong Kong measures from more than five years ago. Ohtaka was fired for allegedly misleading clients into thinking there were natural buyers for two stocks. Citigroup alleged he posted a single batch of 87 so-called indications of interest, or IOIs, that were tagged 'order in hand natural,' even though there wasn't a corresponding client order. That's according to the bank's termination letter seen by Bloomberg News. IOIs are preliminary expressions of trading demand from buyers and sellers in certain stocks. Ohtaka said he never received IOI training, and denied posting and uploading the low-volume batch. The judge in the wrongful dismissal case found it implausible he intentionally misrepresented the orders as real demand. The judge said the IOI post in question didn't violate regulations and the dismissal constituted an abuse of rights. The court ruled that Ohtaka's employment contract is valid and Citigroup didn't have cause to terminate him. The court ordered the bank to compensate him with salary that he would have earned until the time of the judgment, plus interest. Citigroup filed an appeal and threatened to fire Ohtaka again if the judge affirmed the lower court's ruling, according to a Nov. 1 letter from the bank seen by Bloomberg News. While the appeal was stalled, the high court judge in November instructed both sides to attempt to negotiate a settlement and set a Dec. 24 deadline, according to a summary prepared for the court by Ohtaka's lawyer and seen by Bloomberg. Negotiations dragged on until April, partly because Ohtaka refused to accept a confidentiality clause, which is typical in settlements like these. The firing was revoked and both parties agreed to terminate the employment contract, according to the settlement. Ohtaka offered to take a reduced payout in return for a public apology, according to a court submission by his lawyer. The bank refused, he said. The bank declined to comment beyond its statement. Ohtaka said he plans to retire from the finance industry and will use the settlement proceeds to help establish a scholarship fund for high-achieving, underprivileged children. –BLOOMBERG
Mint
4 days ago
- Business
- Mint
Citi Reverses Course on Firing of Japan Trader Five Years On
Citigroup Inc. revoked the firing of a senior trader in Japan as part of a wrongful dismissal settlement following years of wrangling over problematic trading practices in the bank's Asia unit. Ken Ohtaka's dismissal was rescinded after the two sides reached an agreement last month, according to a copy of the settlement seen by Bloomberg News. Ohtaka, Citigroup's ex-Japan agency trading head in Tokyo, rejected a confidentiality clause in the settlement so that he can talk openly about what he describes as a 'global witch hunt in search of scapegoats' that triggered several firings. The internal probe launched in 2018 by law firm Clifford Chance was 'flawed,' and its outcome felt 'predetermined' in order to pin the blame for questionable practices on a group of Asia equity sales traders, Ohtaka said in a phone interview. Ohtaka 'suffered great mental distress as a result of being unilaterally fired by the defendant without any disciplinary reason,' according to court filings for his wrongful dismissal lawsuit. Terms of the settlement weren't disclosed. Citigroup said the bank took appropriate action in line with procedures when personal conduct failed to meet its high standards. 'All Citi investigations are conducted based on facts and evidence, with assistance from independent experts as needed,' a Hong Kong-based spokesperson said in an email. The bank 'has implemented significant remedial measures to strengthen our compliance and internal controls to address this legacy issue, and continues to enhance its processes to reflect best market practices and to meet regulatory expectations.' Clifford Chance in Hong Kong said the firm doesn't comment on client matters. Ohtaka's settlement is the latest chapter in a saga that began when Hong Kong's securities regulator found that traders in Citigroup's Asia markets division had at times misrepresented the bank's own stock positions on trades as client interest for more than a decade. In essence, the regulator concluded, they had indicated there was customer demand to buy and sell specific stocks when it didn't exist. The Securities and Futures Commission said that the 'pervasive dishonest behaviour' went as far back as 2008. The regulator faulted Citigroup for internal control deficiencies and poor management oversight, and fined it about $45 million. After the SFC began reviewing the trades, Citigroup launched its own probe, just months after Ohtaka joined the firm in 2018. The review eventually led to Ohtaka's firing in late 2020, following the dismissal of a dozen traders in Hong Kong and Singapore the previous year. In Tokyo, six traders either quit on their own or were given the option to resign to avoid being fired, according to Ohtaka. Four others were disciplined, resulting in bonus cuts, he said. The bank declined to comment on specific cases. Ohtaka, 58, was among several former employees who sued the bank over their dismissals. Ian Weir, an ex-sales trader for Asia-Pacific markets based in London, agreed to settle his case before a London tribunal in October. Citi denied in its submissions to the tribunal that Weir was unfairly dismissed. In December, former equity sales trader Cindy Lui won her wrongful dismissal suit before Hong Kong's Labour Tribunal. During the probe by Hong Kong regulators, Ohtaka said he assured his Japan team that they had fully complied with local financial regulations and internal bank policies, and that the inquiry shouldn't extend to Tokyo. In the midst of the probe, he was appointed chair of Citigroup Global Markets Japan's execution governance committee. He said he tightened equity-execution rules, including revising several operational protocols to better protect clients and staff. The Hong Kong office rejected some of the measures as too restrictive and growth-stifling, Ohtaka said. The bank declined to comment on the alleged Hong Kong measures from more than five years ago. Ohtaka was fired for allegedly misleading clients into thinking there were natural buyers for two stocks. Citigroup alleged he posted a single batch of 87 so-called indications of interest, or IOIs, that were tagged 'order in hand natural,' even though there wasn't a corresponding client order. That's according to the bank's termination letter seen by Bloomberg News. IOIs are preliminary expressions of trading demand from buyers and sellers in certain stocks. Ohtaka said he never received IOI training, and denied posting and uploading the low-volume batch. The judge in the wrongful dismissal case found it implausible he intentionally misrepresented the orders as real demand. The judge said the IOI post in question didn't violate regulations and the dismissal constituted an abuse of rights. The court ruled that Ohtaka's employment contract is valid and Citigroup didn't have cause to terminate him. The court ordered the bank to compensate him with salary that he would have earned until the time of the judgment, plus interest. Citigroup filed an appeal and threatened to fire Ohtaka again if the judge affirmed the lower court's ruling, according to a Nov. 1 letter from the bank seen by Bloomberg News. While the appeal was stalled, the high court judge in November instructed both sides to attempt to negotiate a settlement and set a Dec. 24 deadline, according to a summary prepared for the court by Ohtaka's lawyer and seen by Bloomberg. Negotiations dragged on until April, partly because Ohtaka refused to accept a confidentiality clause, which is typical in settlements like these. The firing was revoked and both parties agreed to terminate the employment contract, according to the settlement. Ohtaka offered to take a reduced payout in return for a public apology, according to a court submission by his lawyer. The bank refused, he said. The bank declined to comment beyond its statement. Ohtaka said he plans to retire from the finance industry and will use the settlement proceeds to help establish a scholarship fund for high-achieving, underprivileged children. With assistance from Takashi Nakamichi, Hiromi Horie and Katharine Gemmell. This article was generated from an automated news agency feed without modifications to text.
Yahoo
21-05-2025
- Business
- Yahoo
‘Circularity problem' over Mike Lynch's $630 million estate finally resolved as HPE moves closer to settling multibillion-dollar claim
A longstanding stalemate over the fate of a $4 billion claim against the late Autonomy founder Mike Lynch has finally been resolved after the civil judge found a solution to Lynch's family refusing to take up their role as the executors of his multimillion-dollar estate. Lynch passed away in August last year alongside his 18-year-old daughter Hannah and five other passengers after his Bayesian yacht sank in a storm off the coast of Italy. Weeks earlier, Lynch had been acquitted of criminal fraud charges in the U.S. related to Hewlett-Packard's (now HPE) $11.7 billion acquisition of Autonomy in 2011. However, Lynch lost a 2022 civil case in the U.K., which could have left him liable for up to $4 billion in damages based on HPE's demands. Mr Justice Hildyard, who oversaw that civil case, postponed a judgment on a damages figure in the wake of Lynch's death in August, according to a legal document circulated last week. At the time of his 2022 judgment, Hildyard said the final settlement would be considerably lower than the $4 billion figure pursued by HPE. He had been awaiting correspondence from Lynch's legal representatives at Clifford Chance, in the wake of his death. 'Not knowing, at that time, of the reluctance of Dr Lynch's executors to take up their roles, I had envisaged that I would hear back from the parties in October,' Hildyard wrote. However, he confirmed he heard nothing until November, after which it became clear the case had reached an impasse relating to Lynch's estate. Hildyard explained that executors of Lynch's Will, which included his widow Angela Bacares, Autonomy co-founder Richard Gaunt, and its former chief operating officer Andrew Kantar, had at varying points renounced their roles, citing the need to await a judgment on damages to assess their solvency. That created what Travers Smith, the law firm representing HPE, described as a 'circularity problem.' No one was willing to represent Lynch's estate until a settlement was agreed to determine its solvency, but no judgment could be granted until an executor was willing to represent the estate. To break that impasse, Hildyard appointed the retired, former Clifford Chance lawyer, Jeremy Sandelson, as an independent third-party legal representative for Lynch's estate. Sandelson was the preferred choice of Bacares, who knew Lynch and his family 'both socially and professionally.' Sandelson will be able to appoint lawyers and subtract legal fees from the estate's funds. Clifford Chance partner Chris Morvillo and his wife, Neda Morvillo, were among those killed in the Bayesian disaster. The 'Magic Circle' law firm, which represented Lynch, is currently owed around $1.1 million in legal fees linked to the lawsuit across its U.S. and U.K. offices. The Sunday Times Rich List reported that Lynch's assets were worth around £473 million (around $630 million), much of it in Bacares's name. These included their Suffolk estate and most of Lynch's 7% share in Darktrace, the cybersecurity company founded by former Autonomy employees and acquired by Thoma Bravo for $5.3 billion. There was brief speculation that HPE would abandon its case against Lynch, owing to the potential for negative PR from pursuing Lynch's grieving widow, Bacares, for damages. An HPE spokesperson confirmed at the time that the group would see the case through to its conclusion of a settlement, adding a reminder of its fiduciary duty to act in the best interests of shareholders, a point reiterated by HPE chief executive, Antonio Neri. This story was originally featured on
Zawya
19-05-2025
- Business
- Zawya
Banks could lose $30bln tax credit market from Trump's climate rollback: IFR
Clean energy tax credits will no longer be transferable under Republicans' 'One, Big, Beautiful Bill', upending a booming US$30bn business for banks to broker and arrange loans backed by tax credits. Wall Street saw a lucrative opportunity to monetise hundreds of billions of dollars in tax credits granted to clean energy projects after the Inflation Reduction Act was signed into law in 2022 by former US president Joe Biden. As many project developers generate more tax credits than they can offset in tax bills, they typically sell these credits upfront to raise financing for construction. Banks established a business as middlemen in this tax credit transfer market, helping clean energy developers to find corporate buyers and often co-investing in projects. The market grew exponentially to US$30bn in 2024, according to Crux Climate, a financing platform for low-carbon energy. However, the sweeping tax and spending legislation proposal released by Republican lawmakers on May 12 is threatening to put an end to this trade. If the bill is passed in its current form, the ability to sell most types of tax credits to other companies will end in two years. 'It's a significant loss of business for industry participants such as banks that were brokering transferability transactions,' said Alexander Leff, a partner at law firm Clifford Chance focused on renewable energy and infrastructure. 'The loss of transferability will likely reduce overall the volume of tax credit monetisation transactions.' The bill also introduced extensive rollbacks of green subsidies under the IRA, including culling tax credits for electric vehicles and hydrogen production, as well as a gradual phase-out of incentives for other clean power production and advanced manufacturing. Projects that use equipment or critical minerals from companies tied to China, Russia, North Korea and Iran will be denied tax credits. Estimated savings will be used to fund broader tax cuts promised by president Donald Trump. US government bonds sold off sharply following the bill's release on fears that Trump's tax and spending measures will drive inflation higher and postpone interest rate cuts, and that growing deficits could force new borrowing that could add an estimated US$3.3trn to national debt. The controversial bill, which includes deep cuts to Medicaid, is expected to be debated in Congress and put on the president's desk this summer. Short-lived success In the past two years, tax credits transfers have become a popular form of clean energy financing, often arranged by major US banks with longstanding tax equity businesses. The deals are often structured to allow banks to sell tax credits to corporate clients for a profit. Bank of America has been a major player in tax credits and told IFR in December that it planned to be a market-maker in the tax credit transfer market. BofA did one of the first deals when it purchased US$580m in renewable energy production tax credits from Chicago-based Invenergy in 2023 and JP Morgan closed a US$680m financing last June for solar and storage projects by Danish renewables developer Orsted. The proposed bill is also set to hit bridge loans backed by IRA tax credits. As they become non-transferable and less liquid, project developers may no longer be able to use them as collateral for loans. Bank of America declined to comment on the proposed legislation. JP Morgan did not respond to requests for comment. Although existing deals are mostly unaffected as the proposed law permits tax credit transfers until 2027, the future of the market hinges heavily on policy support from the next administration, said David Burton, a partner at law firm Norton Rose Fulbright specialising in energy transactions. 'If I was a young banker, I may think twice about making transferability my specialisation, because if the 2028 election doesn't go well, you may find yourself having a skill set that is no longer valued,' said Burton. Vikrant Prakash, head of Societe Generale's Energy + Group in Houston, said most transactions will continue to be structured in the current format for the next six to 12 months. 'Beyond that, we'll see how tax laws evolve when we get to another election cycle,' Prakash said. Old playbook Although clean energy projects can still be financed through tax equity as they were before the IRA came into effect, these transactions have sophisticated structures and a limited pool of investors. 'The new rules would put some pressure on weaker players, including smaller projects and some esoteric technologies,' Prakash said, adding that large utility-scale projects such as solar and wind could still attract investors. 'Now that we've tasted that other option and we've seen how well it works, it's going to be a real shock to go back to the pre-IRA world,' a senior energy lawyer said. Source: IFR
