FBI Confirms Probe Into High-Speed Trading

By Hannah Thomas-Peter, New York Correspondent

The Federal Bureau of Investigation has been investigating high-speed trading firms for "several months", Sky News has confirmed.

High frequency or high speed trading involves the use of extremely fast computer networks to shave fractions of a second off the time it takes companies to place electronic orders, potentially giving them a huge advantage over traditional rivals.

Companies using the technology can, for example, identify a large, slower order for stock from an ordinary investor, buy that stock ahead of them, and sell it back at a profit.

The practice accounts for about 50% of trading on New York stock exchanges, and is not illegal.

But the FBI wants to know if companies are using their speed advantage in an illegal way.

According to an FBI spokesman the ongoing, wide-ranging investigation includes a number of different companies and concentrates on practices including the front running of shares, 'spoofing' shares, phantom trading, insider trading and other market manipulation.

The FBI is not the only authority investigating the issue.

Among others, the SEC and the New York Attorney General's Office are also probing how it works and whether in some circumstances it is illegal.

News of the FBI's criminal investigation comes at the same time as high-profile financial author Michael Lewis released a book revealing details of the high-frequency trading market.

He told CBS' 60 Minutes programme that the stock market was "rigged", and high frequency traders were profiting at the expense of ordinary investors.

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TPG Turns Taps On For Victoria Plumb Deal

By Mark Kleinman, City Editor

One of Britain's leading bathroom retailers is to be snapped up by TPG, the private equity giant, in a deal that will catapult its owners into the ranks of the super-rich.

Sky News understands that TPG will announce on Tuesday a deal to acquire a majority stake in Victoria Plumb, which sells via the internet and mail order.

The exact value of the deal is unclear but is expected to be worth in the region of £200m, an insider said.

TPG has a long track record of investing in UK-based retailers, previously owning a stake in Debenhams, the department store group, and Republic, the fashion chain.

Victoria Plumb is owned by the Walker family, who are best-known for buying the MFI brand after the collapse of the kitchens and bathrooms retailer several years ago.

Walker Group acquired the rights to the MFI name in 2010 for a reported £250,000, and subsequently went on to buy the Focus DIY brand.

Victoria Plumb was launched in 2001 by brothers Sean and Jason Walker and has since grown rapidly

The most recent published accounts show that the Hull-based business recorded sales of £26.2m in the year to February 2013 and pre-tax profits of £6m.

A year earlier it reported sales of £19m and profits of £4.8m.

Employing more than 70 staff, Victoria Plumb competes with established high street names such as Bathstore, which has itself been put up for sale.

The sale has been handled by KPMG, the accountancy firm.

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GM Faces Congressional Hearing Over Safety

Events Leading Up To GM Recall

Updated: 6:15pm UK, Tuesday 01 April 2014

The US House Energy and Commerce Committee has compiled a timeline of events leading up to General Motors' ignition switch recalls.

Here are some key events highlighted by the committee:

:: 2001 -- A pre-production report for the 2003 Saturn Ion identifies issues with the car's ignition switch. The report indicates that a design change fixed the problem.

:: 2002 -- Ignition switch manufacturer, Delphi, submits a document indicating GM approved switches despite sample testing falling short of the car maker's specifications.

:: November 2004 -- GM opens engineering inquiry following complaint that 2005 Chevrolet Cobalt can be "keyed off with knee while driving".

:: March 2005 -- GM rejects proposed solution for ignition problem, citing long lead times and high costs.

:: July 2005 -- A 2005 Chevy Cobalt crashes in Maryland killing 16-year-old driver Amber Marie Rose.

:: August 2005 -- A probe into the July crash finds that the car's airbag system did not deploy after the vehicle lost power.

:: December 2005 -- GM issues a bulletin to its dealers identifying a problem with ignitions in the Cobalt, Chevy HHR, Saturn Ion and Pontiac Solstice. GM recommends that drivers remove heavy items from key rings.

:: April 2006 -- GM engineer authorises Delphi to implement ignition switch modifications. Changes meant to increase torque performance, and began to appear in 2007 models.

:: October 2006 -- A 2005 Cobalt crash in Wisconsin kills two teenagers. GM updates 2005 bulletin to include additional models, and provides key inserts to nearly 500 customers who brought their cars to the dealer for service.

:: March 2007 -- GM begins probe into accidents involving failed airbag deployments. By the end of the year, the car maker identifies at least four instances when the car's ignition had been in the off position at the time of the crash.

:: November 2007 -- A National Highway Traffic Safety Administration (NHTSA) official recommends an investigation into failed airbag deployments prompted by 29 complains, four fatal crashes and 14 field reports.

:: April 2009 -- A 2005 Cobalt crashes in Pennsylvania, killing the driver and front passenger.

:: February 2010 -- Calspan Crash Data Research Center releases findings from 2009 Pennsylvania crash, saying it was unable to determine why air bags did not deploy.

:: August 2011 -- GM initiates a Field Performance Evaluation to examine frontal impact crashes involving 2005 to 2007 Cobalts and the 2007 Pontiac G5.

:: May 2012 -- GM engineers test the torque performance of ignitions switches on over 40 cars across a range of make and models. Engineers find that the majority of vehicles from model years 2003 to 2007 exhibited torque at or below below the car maker's specifications.

:: April 2013 -- GM hires outside engineering firm to conduct a thorough ignition switch investigation.

:: January 2014 -- Mary Barra named GM's new chief executive.

:: February 2014 -- GM announces recall of 2005 to 2007 model year Cobalts and Pontiac G5 vehicles. Recall later expanded to include 2003-2007 Saturn Ion, 2006-2007 Chevy HHR, Pontiac Solstice and 2007 Saturn Sky.

:: March 2014 -- NHTSA launches probe into GM's handling and reporting of safety-related issues.

:: March 2014 -- GM again expands the ignition switch recall to cover all model years of the Cobalt, HHR, Pontiac G5, Solstice, Saturn Ion and Sky in the US.

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BT Rural Broadband Rollout Under Fire

BT has come under fire from MPs because of its "virtual monopoly" in the rollout of the broadband access for rural areas programme.

The powerful Public Accounts Committee (PAC) said the decision to award all 44 contracts to the company in the £1.2bn scheme had "failed to deliver meaningful competition".

The project was designed to provide those in the countryside with fast data speeds in areas not considered commercially viable.

The PAC said the contract awards by the Department for Culture, Media and Sport (DCMS) gave BT a stronger position while reducing an insistence on value for money.

It said the DCMS should have seen the monopoly position as a "red flag", especially after earlier alarm bells were sounded.

PAC chair Margaret Hodge said: "Since our hearing in July last year, when 26 of the 44 contracts to deliver this were with BT, all remaining contracts have now also gone to BT.

"Despite our warnings last September, the DCMS has allowed poor cost transparency and the lack of detailed broadband rollout plans to create conditions whereby alternative suppliers may be crowded out."

The PAC said publicly-released details remain vague about BT's rollout plan which made it even harder for alternative suppliers to fill gaps or offer higher download speeds.

Mrs Hodge added: "Local authorities are still contractually prevented from sharing information to see if they are securing best terms for the public money they spend.

"Communities can still not access the detailed data they need to understand whether they will be covered by BT's scheme in their area.

BT says it was the only firm willing to take on the challenging terms

"Other broadband providers might be squeezed out of the rural market by BT's actions.

"But we see the lack of transparency on costs and BT's insistence on non-disclosure agreements as symptomatic of (it) exploiting its monopoly position to the detriment of the taxpayer, local authorities and those seeking to access high speed broadband in rural areas."

However, BT rejects the criticism that has been levelled at it and claims of its monopolistic actions.

A spokesman told Sky News: "We respect the role of the committee but we feel their criticism of BT is inaccurate and unjustified.

"BT was the only company willing to accept the challenging terms on offer and make a significant investment in rural areas.

"This was at a time when others walked away when they realised easy pickings weren't to be had. Claims that BT is a 'monopoly' are simply inaccurate given more than 100 ISPs are offering fibre across BT's open network.

"BT is delivering value for money and the National Audit Office acknowledged there are 'robust' processes in place to ensure that."

Meanwhile, the Independent Networks Co-operative Association (Inca) - set up to aid a more holistic broadband system - is pushing for greater inclusiveness.

Inca said: "There has been zero competition for the £1.2bn of public funding despite evidence that independent providers can often deliver better services, more cost-effectively than BT.

"Government and local authorities must now take steps to ensure that there is genuine competition for the additional £250m (plus local match) of superfast extension funding.

"This means genuine transparency over current contracts - where and when BT plan to deliver - and a willingness by Whitehall and local authorities to encourage alternative providers."

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Mobile Banking Doubles As Branches Struggle

Mobile banking transactions doubled last year, further increasing the risk to traditional high street branches.

According to a study by the British Bankers' Association (BBA), the number of transactions carried out on smartphones and tablets reached 18.6 million per week.

It said the pace continued to accelerate and would likely more than double again to two billion transactions this year - more than five million a day.

With desktop and laptop online banking also on the increase, high street branch usage is expected to decline even further.

As an example, the BBA said transactions at Royal Bank of Scotland branches has fallen by nearly a third in five years.

BBA boss Anthony Browne said: "A revolution is underway in how people spend, move and manage their money.

"This is not just about the phenomenal growth of mobile banking, which has already allowed millions of British customers to make billions of transactions from the palm of their hand.

"Make no mistake, the branch will remain integral to banking services in the 21st century - especially for those big moments in life such as arranging a mortgage.

"But the day-to-day use of branches is falling and part of that is because there is a ground swell of people who now find that banking on the move is fast, easy and convenient."

The 2013 digital banking report said more than 12.4 million bank apps have been downloaded and nearly 40 million mobile and internet transactions made every week during 2013.

It added that 28.4 million debit and credit cards were now fitted with contactless technology and that 457.7 million SMS balance alerts and other text messages were issued during 2013.

The report comes as the latest quarterly phone purchase figures were released by Kantar Worldpanel.

It said smartphone penetration has now reached 70% in Britain, with 86% of devices sold in the last three months being the hi-tech devices.

It added that Motorola had gone from virtually no presence to a 6% market share, on the back of its budget Moto G device.

The Motorola surge has helped the Android operating system remain Europe's most popular, with 68.9% of the market.

In Britain, it had 58.3% of the market at the end of February, followed by iPhone with 29%, Windows with 6.7% and Blackberry with 5.1%.

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Shares Up As FCA Clarifies Pension Probe

The City regulator has revealed that it will not individually review millions of pension and saving policies, prompting a share price rise for financial providers.

The Financial Conduct Authority (FCA) clarified the position in its 2014-15 business plan, released on Monday morning.

It comes after almost £2.5bn was wiped off the value of insurers on Friday.

The share price plunge followed comments by FCA director of supervision Clive Adamson to a newspaper about pensions started between the 1970s and the turn of the century.

The Daily Telegraph reported the FCA was planning an inquiry into 30 million policies sold during the period, valued at £150bn.

The chairman of the Commons Treasury Committee, Andrew Tyrie, described the fiasco as an "extraordinary blunder".

In its business plan the FCA said: "We will assess whether firms are operating historic - often termed 'legacy' or 'heritage' - products in a fair way and whether they have adopted strategies that exploit existing customers."

It added: "We have increased our focus on the market for retirement products, such as annuities, with the launch of a major competition study and work to tackle poor sales practices."

An FCA spokesperson told Sky News on Monday it would look into general business behaviour in the sector.

This would include how fairly legacy customers are treated compared with new policyholders, the quality of communications given and what exit fees are imposed.

As a result of the clarification, Britain's big insurance companies enjoyed a share price boost.

In late afternoon trades Resolution was up 1.38%, Aviva up by 1.68%, Legal & General eased but was still 0.63% up and Prudential was 0.23% higher.

Meanwhile, Sky News has learnt that the FCA will this week set out plans for an inflation-busting increase in its budget.

Sky's City Editor Mark Kleinman revealed that its annual funding requirement for 2014-15 would be just under £450m, approximately 3% above the £432.1m it said it required last year.

The increase, which is designed to cover the cost of delivering the regulator's new competition objectives, will hit the pockets of the biggest banks and insurance companies hardest.

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Facebook's Zuckerberg Makes $3.3bn In One Year

Facebook founder Mark Zuckerberg made $3.3bn (£2bn) last year from the sale of stock options, it has been revealed.

The 29-year-old has now exhausted his supply of stock options as a result of Facebook's public offering, but still owns 426.3 million Facebook shares currently worth $25.7bn (£15.42bn).

His salary for 2013 fell to $1 (60p), in line with other technology figures such as Google's Larry Page.

Total compensation for the year was $653,165 (£391,840), which Facebook said was spent mainly on flights on private jets.

The figures emerged in the company's latest regulatory filings.

The documents showed Sheryl Sandberg, Facebook's second-most senior executive, has sold more than half her stake in the company.

However her stake is still worth around $1bn (£600m) and makes her one of the largest individual investors in the social networking company with a 0.5% stake.

Her compensation package fell to $16.2m (£9.7m) from $26.2m (£15.7m) in 2012.

Chief financial officer David Ebersman made $10.5m (£6.3m) in compensation, down from $17.5m (£10.5m) in 2012.

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New Consumer Watchdog CMA Goes On The Prowl

By Poppy Trowbridge, Consumer Affairs

Britons now have a new consumer watchdog responsible for ensuring value for money across a wide range of industries.

The Competition and Markets Authority (CMA) has become the UK's primary competition and consumer agency, bringing together the Competition Commission and the Office of Fair Trading.

The CMA is responsible for competition in the energy, banking, payday lending and higher education sectors.

Its chief executive, Alex Chisholm, told Sky News: "There are some markets where we feel there isn't the kind of intense rivalry that you would like to see among firms, or ones where people are exploiting consumers.

"Those are the ones we need to focus on to get firms competing properly, to make sure people are really serving the consumer, because the consumer is sovereign."

The domestic energy market will come under scrutiny from the CMA

The CMA will prioritise reform in the energy market ahead of financial services industry reform - if energy regulator Ofgem recommends a full market investigation in the coming weeks.

"Confidence is really essential, and if you look at energy there has been a real collapse in confidence and trust," Mr Chisholm said.

Surveys show energy is the least-trusted industry, even more so than banking following the financial collapse in 2008.

Last week, Ofgem published a report criticising the excess profits and tacit collaboration by the big power firms.

The CMA has not decided yet whether the 5% profit margin made by energy companies is fair or not, but Mr Chisholm noted reports citing a 3% margin as "a reasonable return".

He added there were "worrying indicators" of collusion by the biggest energy firms to raise prices that do not reflect increases in the businesses' costs.

The oil industry also passes on price fluctuations to consumers

"When the underlying costs go up, you tend to see retail prices go up very quickly, like a rocket," he said.

The energy companies have blamed the increasing cost of buying oil and gas on the global markets for price hikes.

These costs have decreased 10% in the past nine months, he added.

"When wholesale costs go down, they seem to fall like a feather," Mr Chisholm said.

He said competition in the energy market is working at a midway level of what is achievable, leaving room for significant improvement in competitive behaviour.

But any significant reform in the energy market could take three or four years to complete, and would follow an initial 18-month review into the business.

Payday lenders have also been warned they will be looked at

Mr Chisholm added: "It's more important to get it right than to come up with a quick fix."

Using civil and criminal powers, the CMA can now levy fines running into the tens of millions of pounds, break up monopoly companies by forcing them to sell off business divisions.

It can also crack any industry price-rigging cartels it uncovers, as well as launch criminal cases that may lead to jail terms for convicted offenders.

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Npower Hatches Nest Deal As Energy Row Rages

By Mark Kleinman, City Editor

One of Britain's biggest energy companies has struck a deal with a Google-owned smart technology provider amid the raging debate about rising energy prices.

Sky News understands that Npower, which is owned by the German utility RWE, will announce this week a partnership with Nest Labs, a connected devices-maker which was acquired by Google for more than £2bn.

The alliance will see Npower become the exclusive energy company partner of Nest in the UK, and comes as the big energy suppliers step up their investment in smart-metering technology.

Npower, which has acquired an unspecified number of the Nest thermostats, is expected to unveil plans for a series of new 'bundled' packages similar to those available in the mobile phone and pay-television industries.

These will include specific gas and electricity tariffs combined with Nest's smart thermostats, which claim to reduce home energy wastage.

The Nest partnership could be extended to other RWE operations across Europe over time, a source said.

The move to establish such agreements in an attempt to drive down domestic energy consumption reflects the anxiety felt by the big six utilities as competition authorities kick off a probe of the sector.

The inquiry is unlikely to be concluded until after next year's General Election.

Nest is run by Tony Fadell, one of the architects of the iPhone and iPad during his stint working for Apple.

The company's products will be sold in the UK through John Lewis and B&Q stores, as well as the Apple Store.

A rival smart home energy control product called Tado also launches in the UK this week.

It has secured distribution agreements with Dixons and Maplin Electronics, underlining the land-grab by the manufacturers of such products to secure prime space on the UK's high streets.

Tado claims to save consumers up to 26% of their domestic heating bills annually once the device is installed and the app is enabled on a smartphone.

British Gas, the biggest energy retailer, has a similar product called Hive Active Heating.

Last year, a report published by British Gas and Oxford Economics, a consulting firm, said that the gross savings of the UK's smart-metering programme between 2012 and 2030 would amount to more than £25bn,

A spokesman for Nest refused to comment on Tuesday.

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PM: 'Royal Mail Sell-Off Good For Taxpayers'

The Prime Minister has defended the Royal Mail sell-off, claiming it has been good for the taxpayer, despite a report saying the public purse had lost out.

David Cameron said the sale had benefited the taxpayer in three ways: it had generated money for the country, the Royal Mail was now a "profit-making company paying taxes into the Exchequer" and Britain had a successful business.

The Government has robustly defended the sale against sharp criticism from the National Audit Office, which found that "deep caution" shown by ministers when pricing shares in the Royal Mail last year cost the taxpayer more than £1bn.

Shadow business secretary Chuka Umunna branded the sale a "first-class disaster" and "botched privatisation" before demanding an apology.

The Royal Mail share price since flotation last year

Vince Cable responded in the House of Commons by saying the "last thing" he intended to do was apologise for the Government's undervaluation of the Royal Mail.

The Business Secretary said the Government was right to take a "cautious" approach to the sale and had it not done so it would have put taxpayers' interests at risk.

Royal Mail shares were listed at 330p each and on the first day of trading alone, Royal Mail's new shareholders benefited to the tune of £750m - money which could have gone to public funds. Today they were trading at 565p.

Vince Cable has defended the sale

Mr Cable said: "The last thing I intend to do is apologise. What I do intend to do is to refer to what the report actually said as opposed to the spinning and the froth that is being generated around me."

He said: "A more aggressive approach to pricing would have introduced significantly greater risk and the advice that we received in this respect was unambiguous.

"There was no confidence that a sufficient number of buyers would offer a significantly higher price, a failed transaction and retention of the Royal Mail in public ownership would have been a very poor outcome for the taxpayer as the NAO report confirms."

The NAO report concluded the Business department should not have relied so heavily on their City advisers, while the Public Accounts Committee chairwoman Margaret Hodge accused Mr Cable's department of being "clueless".

How the sale broke down

The Government sold £2bn of shares in October, amounting to 60% of the company, and favoured priority investors such as Standard Life, Fidelity and BlackRock hoping they would be long-term investors.

In the event, the 16 priority investors sold all or some of their holdings, making a significant profit, within the first few weeks of trading.

Amyas Morse, head of the NAO, said: "The department was very keen to achieve its objective of selling Royal Mail and was successful in getting the company listed on the FTSE 100. Its approach, however, was marked by deep caution, the price of which was borne by the taxpayer.

"The Government retained 30% of the company. It could have retained even more and allowed the taxpayer to participate further in the rapidly increasing share price and thus limit the cost to the taxpayer."

Royal Mail employees received 10% of the business

The report does, however, say the Business Secretary was right to reject bankers' gold-plated valuations of Royal Mail of more than £9bn.

Critics of the sale have seized on the axing of 1,300 jobs and a hike in stamp prices in recent days as evidence of the folly of privatisation.

Unite national officer Brian Scott said: "This report is startling proof that the Government sold off the country's family silver on the cheap."

Some 10% of Royal Mail was handed free to employees during the privatisation.

Taxpayers were left with a 30% stake that is now worth around £1.6bn.

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