Legal Professional Privilege cannot be defeated by the FRC’s interpretation of its disclosure regime
As the Parliamentary recess loomed, government departments and agencies rushed to publish their annual reports and accounts. Alongside the Serious Fraud Office, the Financial Conduct Authority (FCA) has issued its own end of term report.
FCA - Growing in both scope and experience
FCA Chairman, John Griffith-Jones, presented his end of year review to Parliament. He confirmed the FCA has played a central role in improving the conduct of the UK’s financial industry. Firms falling within the FCA’s regulatory remit now standing at over 73 000.
Finance is global – so too must be regulation
Recognising that the regulatory landscape is always changing and it should adapt accordingly, international cooperation remains at the heart of the FCA’s work. The number of international enforcement requests for assistance grew to 1,047 formal requests for assistance from overseas counterparts in relation to their investigations issued in 2014/15.
Notable case – Operation Dovercourt, the FX investigation - involved close cooperation with the US Commodities and Futures Trading Commission, the US Department of Justice, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency and New York Department of Financial Services, as well as the Swiss Financial Market Supervisory Authority amongst others!
Spotlight on senior individuals – “setting the tone from the top”
Individual accountability took centre stage with the Senior Managers and Certification Regime. Underling the “credible deterrence approach”, the report clearly underlines the FCAs intention that firms’ senior management should be responsible for robust controls over their banking and securities activities in support of good conduct of business and market conduct outcomes, including market abuse, market manipulation and their financial crime responsibilities.
For more details of the regime which is due to start in the Spring 2016, see our earlier blogs:
The FCA report confirms the total amount of fines levied was £818,712,756. These ranged from fines to individuals under £10, 000 to £126 million BNY Mellon International and BNY London branch. It also has handed down the largest fine for LIBOR and EURIBOR-related misconduct to Deutsche Bank to the tune of £227 million.
Sixty market abuse cases were on the books in 2014, a further 4 open during the year. As at March 2015 49 cases were open. 3 criminal convictions were secured for insider dealing. Paul Coyle, the former Group Treasurer and Head of Tax at WM Morrison Supermarkets plc, Julian Rifat, a former senior execution trader at Moore Capital Management LLC and Ryan Willmott, the former group reporting and financial planning manager for Logica Plc. All pleaded guilty. Nine confiscation orders against individuals with a value of almost £3.5m were obtained.
The FCA confirms that not all the cases investigated brought a public outcome. 52 private warnings were issued where it was considered not appropriate to bring formal disciplinary action. (Nine private warnings issued by Supervision, 33 by the UK Listing Authority, one by Market Monitoring and nine by Enforcement).
Whistleblowing – on the up
The report confirm that information from whistle blowers has contributed to firms and individuals being fined, permissions being varied. 2014-2015 saw 1340 whistleblowing cases an upward trend of 28%. Information sharing – with external bodies including National Crime Agency, police forces, HMRC, Solicitors Regulatory Authority and overseas regulators – contributed to 160 cases.
Confirming that its strategic objective remains to ensure that the relevant markets function well, the FCA recognises the dynamic pace of change in the financial sector and the significant demands on it as regulator. 2015-2016 will see a sector and market-wide analysis being brought into play. Moreover having acquired concurrent competition law powers on 1 April 2015 the FCA states that it will continue to embed and promote competition through an extensive range of activities.
Communication and engagement with stakeholders will be a top priority. Media speculation has it that the City is facing a more lenient approach from regulators. All eyes will be on the FCA new management line up as Martin Wheatley is not to return to the FCA as Chief Executive from September.
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