LONDON: The Financial Services Authority, the British regulator criticized for its handling of Northern Rock, said Wednesday that Clive Briault, the head of retail financial markets, would leave “by mutual agreement” at the end of next month.

As part of a second management restructuring this year, the FSA will appoint directors to oversee retail supervision and financial stability, its chief executive Hector Sants said in a statement. As head of retail financial markets, Briault supervised the unit that regulates banks, insurance companies and mortgage lenders.

“Clive has been an outstanding colleague who has contributed much to the organization in his time at the FSA,” Sants said.

A committee in Parliament said in January that the regulator did not properly supervise Northern Rock, the first British bank to suffer a run on deposits in 140 years.

The Times in London reported last week that five of seven FSA supervisors who advised Northern Rock in the past two years had left their jobs.

Britain said on Feb. 17 that it would nationalize Northern Rock, after a five-month search for a private buyer ended in failure.

Briault was one of the five highest ranking officials at the FSA, alongside the wholesale managing director Sally Dewar and chief operating officer David Kenmir.

Kenmir will temporarily fill Briaults vacancy.

(12-12) 11:53 PST Sacramento, Calif. (AP) —

Handing a major defeat to the auto industry, a federal judge ruled Wednesday that California can regulate greenhouse gas emissions from vehicles.

The ruling by U.S. District Court Judge Anthony Ishii clears one of the hurdles in California’s effort to regulate tailpipe emissions from cars, trucks and sports utility vehicles.

Automakers sued the state over the tailpipe standards it approved in 2004, which would force automakers to build cars and light trucks that produce about 30 percent fewer greenhouse gases by 2016.

However, the state still needs a waiver from the U.S. Environmental Protection Agency to begin implementing the program. The EPA has not yet issued a decision. California and 14 other states sued the agency in November seeking quicker action.

“It’s a major victory and a giant step forward for California,” California Attorney General Jerry Brown said of Wednesday’s ruling. “I hope this will get the attention of President Bush and have him support significant caps on greenhouse gas emissions.”

In its lawsuit against the state, the auto industry argued that it was the federal government’s responsibility to establish one uniform fuel economy standard. Without one, manufacturers would be forced to produce vehicles using too many different efficiency standards.

They argued that a federal energy law passed in 1975 gives the U.S. Department of Transportation sole jurisdiction over fuel economy.

But Ishii rejected that claim, saying Congress gave California and the EPA the authority to regulate vehicle emissions, even if those rules are more strict than those imposed by the federal government.

“While we have not yet had an opportunity to analyze the California federal court’s decision, we are obviously very disappointed by this result,” said Michael Stanton, president and CEO of the Association of International Automobile Manufacturers.

Under the Clean Air Act, California is the only state that can set its own vehicle pollution standards, because it started regulating air pollution before the U.S. EPA was created. Other states are free to choose either the California rules or the federal government’s.

The state’s tailpipe emissions are key to California’s goal of lowering greenhouse gas emissions to 1990 levels by 2020. About a third of the state’s emissions come from cars, pickups and sport utility vehicles, a figure that will only grow if they are not regulated in the nation’s most populous state.

«investing.businessweek.com», the giant quantitative hedge fund, has won permission to boost its stake in trading technology outfit Investment Technology Group («www.businessweek.com»).

In June, Shaw disclosed it owned 6.2% of the company and said it was pushing for changes at ITG to boost its stock price. On Sept. 4, the Federal Trade Commission approved Shaw’s request to further increase its stake to 15%. The FTC action, under the Hart-Scott-Rodino Act, waives a waiting period and clears away antitrust concerns.

It’s a step commonly taken by activist investors. “It provides them the freedom to increase their ownership of the company,” says Damien Park, president of Hedge Fund Solutions. Last month, shares of Biogen («www.businessweek.com») hit a one-year high after activist investor Carl Icahn won FTC clearance to increase his stake in the company.

In a letter sent to ITG’s chief executive in June, D.E. Shaw said ITG’s stock price “fails to reflect the true fair value of [its] global trading products and platforms.” Shaw proposed ways to boost the stock, including selling off all or part of the company or buying back lots of stock. By quadrupling its debt to $600 million, ITG could buy up to 30% of its shares outstanding, Shaw said.

In response, ITG did institute a $50 million stock buyback program. But it said it needs cash first to expand its business, particularly overseas, and to make acquisitions.

D.E. Shaw would not comment on the FTC permission. ITG issued a statement: “We value all interactions with our shareholders, and continue to have an ongoing dialogue with D.E. Shaw.”

A bigger stake would give Shaw more clout to make changes at ITG. The FTC move allows D.E. Shaw to increase its stake up to 15% without triggering certain restrictions under the law in Delaware, where ITG is registered.

Keefe, Bruyette & Woods («www.businessweek.com») analyst Niamh Alexander calls ITG “among the technology leaders transforming the trading process from an art to a science.” Though trading volume on exchanges is spiking, ITG also faces increased competition from low-priced trading venues, Alexander wrote on Thursday.

ITG’s stock, which closed at $41.13 on Sept. 6, is down 4% for the year. Now trading at a price-to-earnings ratio of 19, ITG hit its 52-week high of $50.34 a year ago.

D.E. Shaw, the manager of about $30 billion in assets, was founded by former computer science professor David Shaw. The privately owned firm has pioneered the use of rapid computer trading.

Some of Shaw’s funds were hit hard amid August’s market volatility, with its so-called quantitative strategy funds posting double-digit losses, sources say. Many “quant” funds, which rely on mathematical computer programs to drive trading strategies, suffered steep losses in August. But in recent weeks, a number of those funds have rallied back.

KBW’s Alexander is skeptical of the measures Shaw has proposed to boost ITG’s stock. Given ITG’s expansion plans around the world and the need to operate in cyclical markets, putting on lots of debt for buybacks is “aggressive and unlikely.” Also, she says, there is a shortage of potential buyers of ITG, and the threat of new, increased competition would hurt any purchase price. (KBW seeks investment banking business from ITG.)