Average Wall St. bonus up 15% to $164,530 US

CBC News Posted: Mar 12, 2014 9:44 AM ET Last Updated: Mar 12, 2014 8:31 PM ET

The average Wall Street banker's bonus last year rose to the highest level since the recession, and up to the third highest figure on record, new data out of the N.Y. state comptroller's office showed Wednesday.

"Wall Street navigated through some rough patches last year and had a profitable year in 2013," New York State Comptroller Thomas P. DiNapoli said. "Securities industry employees took home significantly higher bonuses on average."

The typical Wall Street worker took home $164,530 US in bonuses last year, the data shows. That's up 15 per cent from 2012's level and dwarfs compensation seen in any other industry.

The most recent data from Statistics Canada shows the average salaried worker earned $933 a week in December 2013. That works out to just over $48,000 a year — less than a third what Wall Street bankers were paid on top of their base salaries.

There's also evidence, however, that New York bankers may feel they're earning their pay. Total reported profits for broker/dealer operations among the big banks totalled $16.7 billion in 2013. That's 30 per cent less than the $23.9 billion they made in 2012 but still strong by historical standards.

Indeed, the industry as a whole has definitely rebounded from the financial crisis it started. Wall Street's securities industry has now been profitable for five consecutive years, including the three best years on record, the comptroller's office said.

If there's an area in which Wall Street is still hurting, it's likely in job numbers. DiNapoli estimates the securities industry employed 165,200 workers in New York City in December 2013, which is 12.6 per cent fewer workers than before the financial crisis. 

It's still an economic engine for New York, though. Wall Street makes up five per cent of the private sector jobs in New York, but it's responsible for 22 per cent of all the wages paid. And the state collected $10.3 billion in taxes from the industry last year, the data shows.

Mar 12, 2014 4:41 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:15 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:41 PM ET

The data on this site is informational only and may be delayed; it is not intended as trading or investment advice and you should not rely on it as such.

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Economy will rebound after rough winter, OECD says

Brutal winter weather is holding back the global economy, but it's on track for solid growth later in the year, a major economic think-tank says.

The Organization for Economic Co-Operation and Development said in its quarterly assessment for the global economy that the world's developed economies are generally performing strongly and getting back to levels of growth and activity that existed before 2008, when the recession began.

It's a different story on North America, however, which has been dealing with a particularly nasty bout of winter weather. It's been so bad that growth is expected to be negligible when the data come in for the first three months, in both the U.S. and Canada.

U.S. growth is expected to come in at around 1.7 per cent for the January to March period. In Canada, the number is even bleaker — a mere 0.5 per cent. Both figures are well behind growth rates seen elsewhere in the developed world.

The average growth rate across G7 countries is expected to be 2.2 per cent.

"The United States and Canada are both also expected to experience an uneven pattern of growth in the near term, owing in part to the disruptive effect of repeated episodes of severe winter weather," the think-tank said.

"A number of activities were restrained by the storms and cold temperatures, which is likely to depress first-quarter GDP, with some bounceback effect in the second quarter in the absence of further negative shocks."

But the slowdown, even in chilly North America, will be temporary, the OECD says, after winter eventually releases its icy grip. Canada's economy will expand by 2.4 per cent in the spring quarter, the OECD predicts.

In almost all economies, consensus forecasts for 2014 have ratcheted up over the last few months.

The North American slowdown actually started in the last quarter of 2013, as the U.S. government shutdown caused economic activity overall to be slower than it would have been otherwise.

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Luxembourg kills EU tax haven crackdown

The Associated Press Posted: Mar 12, 2014 1:40 PM ET Last Updated: Mar 12, 2014 1:40 PM ET

European Union finance ministers failed once again Tuesday to agree on a sweeping new policy to fight tax evasion because of resistance from Luxembourg, a tiny country that long has prospered from a secretive banking culture.

EU Taxation Commissioner Algirdas Semeta said their failure was disappointing because, if approved, the legislation proposing an EU-wide automatic exchange of data on bank deposits would allow governments to "identify and chase up tax evaders."

Luxembourg, a duchy of barely 500,000 people, was able to shelve the legislation for the 28-nation bloc and its 500 million citizens because the decision required unanimous approval at Tuesday's meeting in Brussels.

Luxembourg Finance Minister Pierre Gramegna said he could not vote in favour and pushed the decision to a summit of EU government leaders next week.

Luxembourg has insisted for years it would support the proposed law only if non-EU banking hubs within Europe, particularly Switzerland, also sign up.

But as the EU's negotiations with Switzerland, Liechtenstein and three other nations on signing the agreement have made progress, Luxembourg has responded with new reasons for opposition, chiefly the risk that banks outside Europe would draw deposits away if the continent's banking rules are tightened too much.

German Finance Minister Wolfgang Schaeuble said he was confident that Luxembourg would drop its opposition at next week's summit.

"We've been working on this for such a long time, whether we agree today or in four weeks, that doesn't kill me either," he said.

EU officials say tax fraud and companies' aggressive cross-border tax avoidance schemes cost the bloc's governments an estimated 1 trillion euros ($1.4 trillion) a year, money needed in an age of sluggish growth and high debt across Europe.

The finance ministers did achieve some progress Tuesday. They drafted compromise proposals designed to break a deadlock between EU governments and the European Parliament on how to set up an agency that could restructure or shut down failing banks, the EU's so-called "single resolution mechanism."

The agency is intended to help stabilize the financial system and reduce the risk that taxpayers would have to fund future bank bailouts. Greek Finance Minister Yannis Stournaras said the new proposals sought to address lawmakers' criticisms. He and other finance ministers declined to provide details.

The proposals are to be presented at negotiations with lawmakers Wednesday in Strasbourg, France.

To avoid significant delays in setting up the agency, an agreement between the EU's governments and European Parliament leaders must be reached by the end of March. That would leave time for the legislation to be voted on before the Parliament dissolves for May elections.

Lawmakers have complained that the EU's original proposals gave national governments and regulators too much influence over the rescue authority's decisions, leaving room to play politics and give advantage to their domestic banks.

The new bank-rescue fund would be financed by a levy on banks that would raise 55 billion euros ($75 billion) over 10 years by 2026. However before the fund would be tapped, a failing bank's creditors, including holders of large deposits, would be forced to take losses.

Mar 12, 2014 4:41 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:15 PM ET Mar 12, 2014 4:34 PM ET Mar 12, 2014 4:41 PM ET

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Ontario woman accused in penny stock fraud calls investor losses 'horrifying'

An Ontario woman who was part of a massive penny stock fraud scheme says she thought she was just helping her boyfriend build his business and now feels terrible about the loss of investors' money.

"This is the worst conceivable thing in the whole world," Andrea McCarthy told a sanctioning hearing at the Ontario Securities Commission on Wednesday.

"People worked hard their whole lives to have money and to have it taken away from them is horrifying," she said.

McCarthy, who acted as a director and officer for BFM Industries Inc. and Liquid Gold International Inc., was found in January by the OSC to be a knowing participant in the scheme. It also said she "illegally distributed" securities and trades without registering with the OSC.

It is alleged that from November 2008 to December 2010, the two companies defrauded 32 foreign investors by selling them $445,000 of worthless stock, and said McCarthy had been responsible for handling the day-to-day operations at the companies, including communicating with investors and withdrawing money from corporate accounts.

But in her testimony on Wednesday, McCarthy, 41, suggested she was simply following instructions from her boyfriend, Sandy Winick, who now faces criminal charges in the U.S. related to a fraud scheme, and said didn't think to question his requests.

"People were constantly asking Sandy for money; he was constantly giving money to people," she said.

McCarthy said she left a job at her ex-husband's company after meeting Winick, who began supporting her financially.

She didn't know what Winick actually did for a living and found him secretive about his businesses, but she was happy to incorporate BFM and list herself as a director when he asked.

"I didn't really appreciate the inner workings of it," she said.

"I thought it was exciting that he was building something I'd be able to work at and feel valuable."

The company seemed legitimate, she added, and she didn't think it was unusual when he also asked her to put her name on a bank account for Liquid Gold.

The pair had several joint accounts as well, and McCarthy was in charge of most of Winick's banking, which she did following specific instructions from him.

Aside from day-to-day living expenses, McCarthy said she received little profits from the alleged scheme beyond an expensive handbag and jewelry, which she later sold.

McCarthy's lawyer, Naomi Lutes, argued McCarthy's limited financial means should be considered by the commission as they deliberate her penalty, as should her willingness to co-operate with investigators and her show of remorse.

McCarthy has no assets, savings or investments, and was forced to cash in her RRSPs to pay her legal fees, Lutes said. She also recently sold her home.

"She's not saying that she didn't make mistakes here and shouldn't have asked more questions," said Lutes, who described McCarthy as a "financially unsophisticated woman."

Lutes is recommending a penalty of $23,300 plus a nominal administrative fine, and says McCarthy does not dispute a proposed 15-year ban on trading in securities.

Jonathon Feasby, a lawyer for the OSC, initially suggested staff were looking for $102,000 in repayment plus $50,000 in administrative fees, but acknowledged there were mitigating circumstances in the case.

OSC commissioner James Carnwath reserved his decision Wednesday.

The OSC has already banned Winick and his business partner, Gregory Curry, from securities trading and ordered them to pay more than $1 million in penalties for breaking securities law.

Those sanctions were related to separate schemes involving securities of BFM, Liquid Gold and a third company called Nanotech Industries Inc.

Winick and Curry are accused by the U.S. Attorney's office of being the leading figures in fraud schemes involving $140 million US and spanning dozens of countries, including Canada.

The two men were arrested in Thailand last summer after a multi-year investigation involving the FBI and the RCMP that also relied on wiretaps in the U.S. and undercover agents abroad.

It is believed there are tens of thousands of victims.

American authorities have also ordered Winick to pay back roughly $3.2 million in "ill-gotten gains" obtained through what they call an "illicit trading scheme" involving another penny stock issuer.

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