PetroChina wins dismissal of US lawsuit over alleged bribery    

PetroChina Co on Monday won the dismissal of a US class-action lawsuit arising from an alleged bribery scheme at China's state-run oil company.

PHOTO: BLOOMBERG

AUG 4, 20158:36 AM

[NEW YORK] PetroChina Co on Monday won the dismissal of a US class-action lawsuit arising from an alleged bribery scheme at China's state-run oil company.

US District Judge Edgardo Ramos in Manhattan dismissed claims by PetroChina investors who accused the company and various officials, including former Chairman Jiang Jiemin, of deceiving them about its internal controls and governance.

An anti-graft campaign championed by Chinese President Xi Jinping has ensnared many officials at PetroChina and its parent China National Petroleum Corp, since the middle of 2013.

PetroChina's market value was roughly US$296 billion as of Monday, Reuters data show.

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In the US lawsuit, investors led by Jeffrey Klein and Samuel Ayoub accused PetroChina and individual defendants of violating US securities laws by concealing "bribery, political corruption, and undisclosed related party transactions."

The lawsuit sought to recoup losses suffered by purchasers of PetroChina securities from April 26, 2012, to Dec 17, 2013, attributable to declines in the company's share price, as news about alleged wrongdoing started to become public.

Judge Ramos, however, said the plaintiffs failed to show that PetroChina made false statements about its corporate governance practices or its internal controls over financial reporting.

He also said there was no showing that the individual defendants knew of or recklessly disregarded alleged corruption at PetroChina at the time.

While the complaint "certainly suggests" that the Chinese government suspected wrongdoing by PetroChina officials,"plaintiffs never specify when that conduct occurred or how it rendered PetroChina's public statements false," Judge Ramos wrote.

Lawyers for the plaintiffs did not immediately respond to requests for comment. A lawyer for PetroChina did not immediately respond to a similar request.

REUTERS

   

US officials eye risks from high frequency trading in bonds  

Federal Reserve Governor Jerome Powell delivers remarks during a conference at the Brookings Institution in Washington on August 3, 2015.

PHOTO: REUTERS

AUG 4, 20157:54 AM

[WASHINGTON] High-frequency trading in the US government bond market carries risks that threaten the ability of the market to function as well as the ability of investors to fairly value assets, two government officials said on Monday.

The impact of high frequency trading has come under increased scrutiny since the "flash crash" last October, in which US Treasuries registered wild price swings in just a 12-minute period.

Critics of high-frequency trading, a computerised strategy that can move billions of dollars in fractions of a second, blame it for causing excessive price swings in the bond market, which is already facing a decline in liquidity.

Federal Reserve Governor Jerome Powell acknowledged the innovation that high frequency trading has brought to the bond market, but he questioned how investors could value the long-term value of a bond or any asset. "If trading is at nanoseconds, there won't be a lot of'fundamental' news to trade on or much time to formulate views about the long-run value of an asset; instead, trading at these speeds can become a game played against order books and the market rules," Mr Powell said, speaking on a panel at a conference on US bond market structure sponsored by the Brookings Institute.

Antonio Weiss, counselor to the US Treasury secretary, was blunter. "The constant pursuit to save one more millisecond not only consumes resources potentially better invested elsewhere, but increases the pressure on the plumbing of the system to handle ever-increasing speeds and messaging traffic," he said in a speech prepared for deliver to the panel.

The impact of high frequency trading on the US$12.5 trillion Treasuries market was profound last Oct 15, with many questions still unanswered.

On that day, Treasuries trading volume exploded in a matter of 12 minutes. Benchmark 10-year Treasuries yields swung in a 37-basis-point range during that period, only to end 6 basis points lower on the day, according to a report released in July by the Treasury, the Federal Reserve, the Securities and Exchange Commission and the Commodity Futures Trading Commission The report said companies that engage in algorithmic trading, or Principal Trading Firms, accounted for 70 to 75 per cent of total trading in both the cash and futures markets, up from about 50 per cent on "normal" days.

Mr Weiss said high frequency trading "is, quite simply, a disruptive technological innovation, which has reshaped an entire industry structure." Mr Weiss and Powell said the changing bond market structure stemming from the growing role of high frequency trading warrants more examination. "Is the race for speed helping or hurting market function?" Mr Weiss said.

REUTERS