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The following posts provide a snapshot of selected UK, EU and global financial regulatory developments of interest to banks, investment firms, broker-dealers, market infrastructures, asset managers and corporates.

  • European Commission Report on EU Whistleblowing Directive
    July 3, 2024

    The European Commission has published a report on the implementation and application of the EU Whistleblowing Directive. The Directive aims to guarantee a high level of balanced and effective protection for persons who report information on breaches of EU law in key policy areas where such breaches may cause harm to the public interest.

    Read more.
  • Bank of England Consults on Revisions to Statement of Policy on Enforcement
    04/15/2024

    On March 28, 2024, the Bank of England published a consultation paper on revisions to its Statement of Policy and Procedure on its approach to enforcement, published in January 2024, to reflect enhancements to the BoE's enforcement powers granted under the Financial Services and Markets Act 2023.

    Read more.
  • UK Conduct Authority Consults on New Approach to Enforcement and Publication of Enforcement Investigations
    02/27/2024

    On February 27, 2024, the U.K. Financial Conduct Authority published a consultation on revisions to its Enforcement Guide, setting out proposals which aim to simplify the guidance and increase transparency around the FCA's enforcement actions. Responses to the consultation may be submitted until April 30, 2024.

    Read more.
  • UK Financial Conduct Authority Announces New Approach to Speed Up Issuing Statutory Notices
    11/26/2021

    The U.K. Financial Conduct Authority has published a policy statement setting out its new approach to issuing statutory notices, which will take effect from November 26, 2021. The FCA publishes statutory notices when exercising certain enforcement and supervisory powers, such as varying or cancelling a firm’s authorization, refusing an application for authorization or approval of an individual, and imposing requirements on firms.

    Read more.
  • European Securities and Markets Authority Proposes Improvements to Transparency Directive
    03/03/2021

    The European Securities and Markets Authority has written to the European Commission proposing a series of improvements to the EU Transparency Directive, taking account of lessons learned in the Wirecard case. Wirecard, a German payments group, collapsed in 2018 when it was revealed that €1.9bn was missing from its public accounts. Several of its senior managers remain under police investigation for alleged crimes including fraud and market manipulation. In ESMA's view, the case has highlighted the need for timely and effective enforcement of financial information and proposes the following amendments to the EU Transparency Directive to help achieve this.

    Read more.
  • European Central Bank Publishes Guide to Pecuniary Penalties for Prudential Regulatory Breaches
    03/02/2021

    The European Central Bank Banking Supervision division has published a guide to its method for setting pecuniary penalties for breaches of prudential regulatory requirements by Eurozone banks that are directly prudentially supervised by the ECB. The ECB will adopt a two-stage approach, first determining the base amount, and then deciding whether to adjust that amount by reference to a range of factors.

    Read more.
  • European Securities and Markets Authority Reports on Sanctions Imposed Under UCITS Directive
    12/12/2019

    The European Securities and Markets Authority has published its second annual report on the sanctions imposed in 2018 under the Undertakings for Collective Investments in Transferable Securities Directive. The UCITS Directive requires national regulators to inform ESMA annually of information relating to all penalties and measures they have imposed under the Directive during the previous calendar year, which ESMA then compiles in a single annual report. 

    Read more.
    Topic : Enforcement
  • Report on Loan Enforcement Laws Across the EU Published
    12/03/2019

    The European Commission has published a study analyzing the individual and collective loan enforcement laws in the 28 EU member states. The report, authored by Dr Steffek, University of Cambridge, sets out in anonymized format the results of the study on member state loan enforcement laws from the perspective of the bank as lender enforcing a loan contract against a company, a sole trader, a partnership or a consumer as borrower.

    Read more.
    Topic : Enforcement
  • EU Report on Sanctions and Measures Imposed under MiFID II in 2018
    07/17/2019

    The European Securities and Markets Authority has published a report on enforcement actions taken across the EU for breach of the revised Markets in Financial Instruments package. The report covers administrative sanctions and measures as well as criminal sanctions in aggregated form for 2018. ESMA notes that the data is limited because MiFID II has only applied since January 3, 2018, and some Member States were late in applying the requirements. Therefore, ESMA does not believe that it is possible to detect any trends using the limited data. ESMA will produce the same report annually, based on the submission of information from national regulators.

    View the report.
    Topics : EnforcementMiFID II
  • UK Regulator Publishes Final Mission Approach Documents for Supervision and Enforcement
    04/24/2019

    The U.K. Financial Conduct Authority has published its finalized Approach to Supervision and Approach to Enforcement, following feedback to its consultation between March 21 and June 21, 2018 on drafts of the two approach documents. The documents should be read alongside the FCA's Mission document which was first published in October 2016 and most recently updated in November 2017. The documents form part of a series of formal approach documents explaining the FCA's approach to regulation in more depth.

    Read more.
  • US Federal Judge Affirms Commodity Futures Trading Commission's Authority to Police Virtual Currency Fraud
    09/26/2018

    The U.S. District Court for the District of Massachusetts issued an order confirming that the Commodity Futures Trading Commission maintains the authority to police virtual currency fraud. The order was issued in response to a motion to dismiss charges against My Big Coin Pay, Inc. and several individuals for operating a fraudulent virtual currency scheme through which they solicited customers to purchase a virtual currency known as My Big Coin (MBC).

    The CFTC's initial enforcement order, filed in January 2018, accused the defendants of operating a fraudulent virtual currency scheme through which they solicited more than $6 million from customers throughout the U.S. by making false and misleading claims that MBC was actively being traded, was backed by gold and could be used anywhere MasterCard credit cards were accepted. The defendants also were alleged to have misrepresented MBC's daily trading price in reports on its website, when no daily trading price existed because MBC was not actively being traded.

    Read more
  • US Federal Financial Regulatory Agencies Reaffirm the Role of Supervisory Guidance
    09/11/2018

    The U.S. Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, Office of the Comptroller of the Currency and Bureau of Consumer Financial Protection issued an interagency statement explaining the role and legal status of supervisory guidance.

    Read more.
    Topic : Enforcement
  • Bank of England Establishes Enforcement Decision Making Committee and Appoints Members
    08/03/2018

    Following a consultation that ran between November 2017 and February 2018, the Bank of England has published a policy statement on the procedure and necessary revisions to existing policies and procedures required for the establishment of an Enforcement Decision Making Committee.

    The EDMC has been established as a response to a recommendation from HM Treasury arising from its review of enforcement decision-making at the U.K. financial regulators. HM Treasury had recommended the establishment of a functionally-independent decision-making committee composed of independent members with expertise suited to the Prudential Regulation Authority's regulatory focus. The BoE has gone beyond HM Treasury's original recommendation and, going forward, the EDMC will be the BoE's decision-making body in contested enforcement cases that relate to all areas in which the BoE has enforcement powers (that is, prudential regulation, financial market infrastructure, resolution and note issuances). It will ensure the necessary functional separation between the BoE's investigation teams and decision-makers.

    Alongside the Policy Statement, the BoE has published revised statements of policy and procedures reflecting the EDMC's establishment. These cover the EDMC's remit and operation and the selection, appointment, remuneration and governance of EDMC members. The BoE has also issued a press release announcing its appointment of six EMDC members. Members are appointed for renewable, fixed, three-year periods and cannot serve more than two consecutive terms.

    Read more.
    Topics : EnforcementPeople
  • US Federal Banking Regulators Issue Policy Statement Regarding Coordination of Enforcement Actions
    06/12/2018

    The U.S. Board of Governors of the Federal Reserve System, U.S. Office of the Comptroller of the Currency and U.S. Federal Deposit Insurance Corporation issued a policy statement with respect to notification and coordination of formal enforcement actions. The policy statement was issued in response to the rescission of the Federal Financial Institutions Examination Council's "Interagency Coordination of Formal Corrective Action by the Federal Bank Regulatory Agencies" revised policy statement, which was issued on February 20, 1997. The interagency policy statement provides that when a federal banking regulator determines that it will take a formal enforcement action against any federally insured depository institution, depository institution holding company, non-bank affiliate, or institution-affiliated party, the agency should consider whether the enforcement action involves the interests of another federal banking regulator. If it is determined that the enforcement action does involve the interest of another federal banking regulator, the agency proposing the enforcement action should notify the other relevant federal banking agency or agencies at the earlier of when written notification is provided to the subject financial institution regarding the enforcement action, or when the respective agency determines that an enforcement action is expected to be taken. If it is determined that the enforcement action does involve the interest of another federal banking regulator, the agency proposing the enforcement action should provide sufficient information to allow the other federal banking regulator to take necessary action in examining or investigating the financial institution or institution-affiliated party.

    Read more
    Topic : Enforcement
  • New Memorandum of Understanding Signed Between UK Financial Conduct Authority and Insolvency Service
    05/21/2018

    The U.K. Financial Conduct Authority and the Insolvency Service have signed a Memorandum of Understanding to establish a framework for their cooperation in matters of common interest.

    Both the FCA and the IS have statutory powers of investigation and enforcement under their respective enabling legislation. Both organizations are also legally obliged, from May 25, 2018, to handle personal information according to the requirements of the EU General Data Protection Regulation.

    The areas of cooperation include misconduct, investigations and enforcement within their respective remits.

    The MoU outlines the structure and process for the FCA and IS to be able to exchange information (including personal data) and intelligence, in a lawful and proportionate manner, to further their respective objectives. The MoU includes details of the circumstances in which the FCA will be permitted to disclose confidential information (such disclosure generally being prohibited under the Financial Services and Markets Act 2000) and outlines how each of the two organizations will treat information that is subject to legal professional privilege, including the circumstances in which privilege might be waived. The FCA and IS have agreed to apply a number of principles for the exchange and use of information, including the sharing of intelligence, the use of information for investigations and enforcement or other action, how data security controls will be applied and how data breaches will be handled.

    The FCA and IS will monitor the effectiveness of the MoU and review it from time to time as necessary. The MoU has been published on the website of each organization.

    View the MoU.
  • European Commission Proposes Protective Legislation for Whistleblowers Reporting EU Law Breaches
    04/23/2018

    The European Commission has published a proposal for a Directive on the protection of persons reporting on breaches of Union law. Whistleblowers help prevent damage and detect threat or harm to the public interest that may otherwise remain hidden, but fear of retaliation can often discourage them from reporting concerns.

    The importance of providing effective whistleblower protections for safeguarding the public interest has been acknowledged both at European and international level. At EU level, whistleblower protections are currently provided only for specific sectors and to varying degrees. This means that, in many situations, whistleblowers are not properly protected against retaliation. The proposed Directive will address this fragmentation by encompassing "the broadest possible range of categories of persons, who, by virtue of work-related activities (irrespective of the nature of these activities and whether they are paid or not), have privileged access to information about breaches." Areas covered include financial services, money laundering and terrorist financing.

    Read more.
  • UK Regulator Consults on Mission Approach Documents for Supervision and Enforcement
    03/21/2018

    The U.K. Financial Conduct Authority has published two consultations, seeking feedback on draft documents setting out its regulatory approach to supervision and enforcement. The two documents, once finalized, will form part of a series of formal "approach documents" explaining the FCA's approach to regulation in more depth. They should be read alongside the FCA's Mission document, which was first published in October 2016 and most recently updated in November 2017.

    Read more.
    Topic : Enforcement
  • UK Government Launches Independent Review Into the Prudential Supervision of the Co-operative Bank
    03/06/2018

    HM Treasury has directed the Prudential Regulation Authority to conduct an independent investigation into the prudential regulation of the Co-operative Bank plc during the period 2008 to 2013. HM Treasury is empowered to require the Financial Conduct Authority or PRA to undertake investigations where it considers that such an investigation is in the public interest and the relevant regulator has not launched an investigation on its own initiative. The investigation will consider the actions, policies and approach of the Financial Services Authority and one of the successors to its functions, the PRA, during their respective periods in charge of prudential supervision, including the withdrawal by the Co-operative Bank from the bidding process to purchase bank branches from Lloyds Banking Group (known as Project Verde).

    Read more.
  • Department of Justice Issues Letter Limiting Use of Agency Guidance in Civil Enforcement Actions
    01/25/2018

    US Associate Attorney General Rachel Brand issued a letter regarding the use of agency guidance, defined in the memo as “any agency statement of general applicability and future effect. . .that is designed to advise parties outside of the federal Executive Branch about legal rights and obligations,” as a tool for civil enforcement actions.  In the letter, Ms. Brand references a November 16, 2017 memo from US Attorney General Jeff Sessions entitled “Prohibition of Improper Guidance Documents.” The letter from Ms. Brand reiterates that guidance documents may not be used to circumvent the notice-and-comment rulemaking process.  The letter also highlights that Department of Justice personnel are prohibited from using agency guidance documents as a means to require that regulated entities take or refrain from any action not otherwise mandated by law or regulation, and that non-compliance with agency guidance should not in and of itself result in an enforcement action.  The letter notes that while agency guidance may be used for other purposes, such as showing that the financial institution had knowledge regarding its obligations under law or regulation, DOJ personnel should not use non-compliance with agency guidance as presumptive or conclusive evidence that a financial entity violated the underlying law or regulation.

    View full text of DOJ letter.
    Topic : Enforcement
  • Federal Reserve Board Adjusts Maximum Civil Money Penalties
    01/10/2018
    The US Board of Governors of the Federal Reserve System announced a final rule adjusting the maximum amount of its civil money penalties. This adjustment is made to account for inflation, and is required by the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The announcement contains a table reflecting each adjusted civil money penalty, organized by statute. The adjusted civil money penalties took effect on January 10, 2018.

    View text of the final rule.
    Topic : Enforcement
  • Bank of England Consults on Procedures for Decision Making in Contested Enforcement Cases
    11/10/2017

    Following positive feedback to its consultation in 2016 on the establishment of an Enforcement Decision Making Committee, the Bank of England has published a consultation on the detailed statement of procedure and the necessary revisions to existing policies and procedures that will be required to implement the proposals. The EDMC is being established as a direct response to a recommendation from HM Treasury arising from its review of enforcement decision-making at the UK regulators. HM Treasury had recommended the establishment of a functionally-independent decision-making committee composed of independent members with expertise suited to the Prudential Regulation Authority's regulatory focus. Once established, the EDMC will be the BoE's decision-making body in contested enforcement cases that relate to prudential regulation, financial market infrastructure and resolution. It will ensure the necessary functional separation between the BoE's investigation teams and decision-makers. The consultation paper sets out detailed proposals on the EDMC's remit and operation and the selection, appointment, remuneration and governance of EDMC members.

    Comments on the consultation are requested by February 2, 2018.

    View the BoE Consultation Paper.
    Topic : Enforcement
  • UK Regulators Finalize Changes to Enhance Their Enforcement Decision-Making Processes
    02/01/2017

    The Financial Conduct Authority and Prudential Regulation Authority published a joint Policy Statement on changes to their enforcement decision-making processes. The changes are in response to the recommendations set out in HM Treasury's Review of enforcement decision-making at the financial services regulators (known as the Enforcement Review), published in December 2014, and the report by Andrew Green QC in the enforcement actions following the failure of HBOS (known as the Green Report), published in November 2015. The Enforcement Review and the Green Report made three overlapping recommendations about the regulators' decision-making processes covering pre-referral decision-making, communication and cooperation between and within the regulators and informing the subject of an investigation about the matters under investigation. 

    Read more.
    Topic : Enforcement
  • European Securities and Markets Authority Requests a Review of its Sanctioning Powers Under the European Market Infrastructure Regulation 
    01/30/2017

    The European Securities and Markets Authority published an open letter to the European Commission asking it to consider several issues relating to its supervisory and sanctioning powers under the European Market Infrastructure Regulation and emphasizing similar aspects relating to Credit Rating Agencies. The letter follows the Commission's Report, published on November 23, 2016, assessing the issues arising from the implementation of the requirements of EMIR in which the Commission proposed a legislative review of EMIR in 2017. ESMA submitted four reports to the Commission in 2015 on the functioning of EMIR which included recommendations on how EMIR could be enhanced. The letter highlights the areas in those reports that ESMA considers the Commission should consider as part of the EMIR review this year. 

    Read more.
  • Securities and Exchange Commission Chair Mary Jo White Discusses SEC Enforcement
    11/18/2016

    Chair of the Securities and Exchange Commission Mary Jo White discussed the SEC’s enforcement program, focusing on white collar crime in particular. She detailed the SEC’s “Investigate to Litigate” philosophy, where SEC staff are instructed to conduct all investigations with litigation in mind. She also discussed a number of measures the SEC has to detect misconduct, from advanced data analysis to whistleblowers. In particular, she highlighted the SEC’s focus on individual wrongdoers and its policy of requiring admissions as a condition for certain settlements.

    Read more.
    Topic : Enforcement
  • European Supervisory Authorities Publish Joint Guidelines on a Risk-Based Approach to Anti-Money Laundering and Terrorist Financing Supervision 
    11/16/2016

    The Joint Committee of the European Supervisory Authorities published joint Guidelines on the characteristics of a risk-based approach to anti-money laundering and terrorist financing supervision. The ESAs consist of the European Banking Authority, the European Securities and Markets Authority and the European Insurance and Occupational Pensions Authority. The Guidelines build on the ESA’s previous “Preliminary report on anti-money laundering and counter financing of terrorism Risk Based Supervision” that was published in October 2013. The Guidelines outline steps to be taken by regulators when conducting AML/CTF supervision on a risk-sensitive basis. The Fourth Anti-Money Laundering Directive, amongst other things, aims to bring European legislation in line with the Financial Action Task Force’s International Standards on Combating Money Laundering and the Financing of Terrorism. The ESAs emphasize that AML-and CFT-related risk-based supervision is ongoing and cyclical and the Guidelines outline four requisite steps that national regulators should apply. Step 1 involves the regulator identifying the money laundering or terrorist financing risk factors by obtaining information of both domestic, foreign and sector-wide threats. Step 2 requires the information to be used by the regulator to conduct a risk assessment and obtain a holistic view of the risks associated with each firm. Step 3 requires the allocation of supervisory resources factoring in issues such as the required focus, depth, duration and frequency of the on-site and off-site activities and supervisory staffing needs. Step 4 requires regulators to ensure that the risk assessment and level of allocated supervisory resources remains commensurate to AML/CFT risks through ongoing monitoring and reviewing processes. The Guidelines will apply one year after the Guidelines have been issued.
     
    View the joint Guidelines.
  • UK Legislation Implements Financial Services and Markets Act 2000 Updates to Secondary Legislation
    10/24/2016

    The Financial Services (Banking Reform) Act 2013 (Consequential Amendments) (No. 2) Order 2016 was made. The Order amends secondary legislation as a result of updates to the Financial Services and Markets Act 2000 relating to disciplinary powers for the Financial Conduct Authority and Prudential Regulation Authority applying to the misconduct of individuals and the senior manager’s regime. The Order also amends FSMA secondary legislation which specifies a "qualifying EU provision" applied for the purposes of determining whether a person has been knowingly concerned in a contravention of a relevant requirement by an authorized person under the new section of FSMA relating to FCA and PRA powers. The Order will enter into force on November 21, 2016.

    View the Order.
  • Proposed Amendments to UK Proceeds of Crime and Terrorism Legislation 
    10/13/2016

    A Bill was introduced in the UK Parliament proposing amendments to the Proceeds of Crime Act 2002 and Terrorism Act 2000. The Bill forms part of the UK Government’s Action Plan to counter money laundering and the funding of terrorism. The Government launched a consultation in April this year on its proposals to overhaul the UK approach to AML and CTF. The Government’s Response to the initial consultation was published on the same day that the Bill was introduced. 

    Read more.
    Topic : Enforcement
  • US Federal Reserve Board Invites Comment on Interim Final Rule Adjusting Maximum Civil Money Penalties
    08/01/2016

    The US Federal Reserve Board invited comment on an interim final rule adjusting the Federal Reserve Board’s maximum civil money penalties, as required by law.

    In November 2015, a law was passed that requires all federal agencies to adjust their maximum civil money penalty limits annually, rather than every four years, as previously required. Additionally, the law sets forth the adjustment formula for federal agencies. The Federal Register notice details the civil money penalty adjustments made by the Federal Reserve Board.

    The interim final rule became effective on August 1, 2016, and will apply to those penalties assessed after this date. The Federal Reserve Board was accepting comments until August 30, 2016.

    View interim final rule.
    Topic : Enforcement
  • Bank of England Proposes to Extend its Enforcement Remit
    07/22/2016

    The Bank of England published a consultation paper on a proposed unified Enforcement Decision Making Committee. The EDMC would take decisions on the matters regarding: (i) firms and individuals regulated by Prudential Regulation Authority; (ii) financial market infrastructure; and (iii) the resolution of contested enforcement cases. The consultation follows a recommendation by HM Treasury to extend the proposed EDMC model across all the areas where the Bank has enforcement powers. The EDMC would be established by the Court of Directors of the Bank of England and its 15 members would be independent from the Bank’s executive management structure and would be appointed for a renewable 3 year term. The EDMC would undertake administrative processes, not judicial, and would be similar to the FCA's Regulatory Decisions Committee, with a right of appeal to a judicial body after its decisions was reached. The EDMCs remit would include all contested statutory notice decisions. The Bank seeks feedback on the creation of the EDMC including on its proposed composition, independence, jurisdiction, decision making powers and processes. 

    Responses to the consultation are due by October 21, 2016. The Bank aims to publish guidance on the consultation as part of a comprehensive external policy statement on the Bank’s enforcement process during the course of 2017. 

    View the consultation paper.
    Topic : Enforcement
  • US Deputy Attorney General Sally Yates Discusses Individual Accountability and Yates Memo
    05/10/2016

    US Deputy Attorney General Sally Yates discussed the history and implementation of the so-called “Yates Memo,” a September 2015 policy statement issued by the US Department of Justice entitled “Individual Accountability for Corporate Wrongdoing.” Yates stressed that the prosecution of individual employees and executives has always been a priority of the DOJ, and is essential to having a substantial impact on corporate culture. She highlighted the application of the policy to corporate actors in the financial services sector.  However, determining which individuals are actually responsible for corporate misdeeds can be challenging in light of blurred authority lines and large amounts of documents that may be subject to privacy protection laws. Accordingly, Yates shared that the DOJ convened a group of Department lawyers to focus on ways the DOJ could overcome these challenges, and their discussions culminated in the issuance of the Yates Memo. 
    Topic : Enforcement
  • UK Regulators Proposals to Enhance Their Enforcement Decision-Making Processes 
    04/14/2016

    The Financial Conduct Authority and Prudential Regulation Authority published a joint consultation paper on proposals to implement certain aspects of the recommendations set out in HM Treasury's Review of Enforcement Decision-making at the Financial Services Regulators (known as the Enforcement Review), published in December 2014, and the report by Andrew Green QC in the enforcement actions following the failure of HBOS (known as the Green Report), published in November 2015. 
     
    Topic : Enforcement
  • UK Government Body on Financial Sanction Implementation Established
    03/31/2016

    A new “Office of Financial Sanctions Implementation” (OFSI) was established within Her Majesty’s Treasury, with responsibility for ensuring that sanctions are “properly understood, implemented and enforced in the UK”.  Despite an expansion in the number of sanctions programmes in the EU in recent years, as well as increasingly complex rules, there have not been any significant enforcement actions in the UK, a situation which contrasts with the enthusiastic enforcement practices of US sanctions enforcement agencies. OFSI is expected to work closely with other regulatory authorities, such as the FCA, to apply a more effective sanctions enforcement regime than has previously been the case. To this end, the government is also legislating to ensure that suitable remedies are available for sanctions enforcement.  Provisions in the Policing and Crime Bill outline new administrative penalties, monetary penalties and an increase in the maximum custodial sentence for breaching financial sanctions to seven years on conviction on indictment (or six months imprisonment on summary conviction).
     
  • UK Regulator Consults on Client Money Rules and the Special Administration Regime
    03/09/2016

    The Financial Conduct Authority issued a discussion paper on client money rules (CASS 7) and the Special Administration Regime Review. The discussion paper is relevant to all regulated firms that hold client assets or money for investment business. Client money rules govern how client assets are to be distributed by an insolvency practitioner managing a failed investment firm. The discussion paper is in response to the recommendations made in the Bloxham Final Report which aims to improve the speed of return of client assets and minimize the market impact of a failed firm's entry into special administration.

    Read More
  • Upper Tribunal Decision Published on Whether a Third Party was Identified in a UK Regulator's Notice
    03/04/2016

    A decision of Upper Tribunal Tax and Chancery Chamber on whether a Decision Notice issued by the Financial Conduct Authority prejudicially identified a third party was published. On April 23, 2015, the FCA issued Deutsche Bank AG with a Decision Notice (preceded by a Warning Notice and then subsequently a Final Notice) notifying the bank of the FCA's decision to impose on it a financial penalty of £226,000 as a result of serious misconduct. The finding of misconduct related to attempted manipulation of two benchmark interest rates. The Applicant, Mr. Vogt, was employed by the bank as a money market trader during the time of the alleged misconduct. The Applicant argued that the contents of the Decision Notice (and other relevant notices) prejudicially identified him. As the Applicant had not seen the Decision Notice he based his complaint on the contents of the Final Notice, assuming it was materially the same as the Decision Notice. The Applicant maintained that, in breach of its obligations under the Financial Services Markets Act, the FCA had failed to provide him with a copy of the Decision Notice at the time of issuance and prior to its publication.  FSMA provides certain rights to third parties in relation to Warning and Decision Notices given to another person by the FCA. The FCA took the view that the Applicant was not identifiable from the Final Notice. In dismissing the application and deciding that the Applica had not been prejudicially identified in the Final Notice, the Upper Tribunal found that the contents of the Final Notice and other material would not lead a person professionally acquainted with Applicant to conclude that Mr Vogt was the third party identified in the Final Notice. This follows the Upper Tribunal's recent decisions in Christopher Ashton v FCA; Christian Bittar v FCA; and the Court of Appeal's judgment in Achilles Macris v FCA.

    View the Upper Tribunal's decision.
    Topic : Enforcement
  • UK Regulator Publishes Proposed Guidance on Enforcing Security and Default Notices under the Consumer Credit Act
    02/19/2016

    The Financial Conduct Authority published proposed guidance on the FCA's updated view on enforcing security under the Consumer Credit Act and when a default notice is required to be issued. The guidance is aimed at firms that provide consumer credit services and products. The proposed guidance invites comment on "what is enforcement" in the context of when a firm could breach the CCA. The proposed guidance relates to the requirement under the CCA to serve a default notice, following the breach of a regulated agreement, before taking certain enforcement actions. In a previous feedback statement published in September 2015, the FCA stated that a default notice was not required when taking or demanding payment from guarantors following a default because this was deemed to be enforcement of a security. This guidance provides the updated view that this statement made in the feedback statement was incorrect. The guidance provides specific circumstances where a default notice would be required in the context of guarantor loans. One such circumstance is where a creditor wishes to request or take payment from a guarantor following non-payment by a debtor. The FCA has taken the view that a creditor cannot take payment from the guarantor where it has failed to serve a valid default notice. Comments on the consultation may be submitted until March 18, 2016.

    View the Proposed Guidance.
  • UK Court Orders the Return of £2.9 Million to Defrauded Investors
    02/12/2016

    The Southwark Crown Court ordered Mr. Alex Hope and Mr. Raj Von Badlo to return around £2.9 million to investors who were defrauded by a collective scheme that Mr. Hope established and operated without regulatory authorization to do so. The Court made a confiscation order against Mr. Hope, pursuant to the Proceeds of Crime Act 2002, for an amount of £166,696. Mr. Hope's co-defendant, Mr. Von Badlo, was also subject to a confiscation order made at a hearing on December 18, 2015, in which he was ordered to pay £99,819. The Orders follow a prosecution by the Financial Conduct Authority.  The scheme, which was closed down by the FCA in April 2012, had a significant impact on over 100 investors. Mr. Hope had represented himself as a talented and skilful trader however he only actually traded around 12% of the total money his investors had given him and spent the majority of his investors' funds on himself. Mr. Hope was found guilty of fraud for operating an investment scheme without authorization in September 2015. Mr. Badlo pleaded guilty in July last year to recklessly making false representations to investors and promoting a collective investment scheme without authorization. Both individuals were sentenced to seven and two years’ imprisonment respectively in January 2015. Failure by Mr. Hope or Mr. Von Badlo to comply with the Court’s orders could result in their current prison sentences being extended.

    View the FCA’s press release.
    Topic : Enforcement
  • European Banking Authority Reports on Administrative Penalties Published on an Anonymous Basis
    12/02/2015

    The European Banking Authority published a report on the administrative penalties for breach of national law implementing the Capital Requirements Directive imposed by Member States and published on an anonymous basis. Under the CRD, Member States must publish details of any administrative penalties imposed for breach of the relevant national law except in certain circumstances where the CRD allows the publication to be anonymous. The EBA is required to report on any divergences between member states in their approach to the publication of penalties on an anonymous basis and in the duration of the publication under national law. The EBA makes the following recommendations: (i) the penalties should be published on a dedicated part of the website to enhance accessibility; (ii) the decision should also be published in English or a summary thereof; and (iii) that the grounds for deciding to publish a decision on an anonymous basis should be disclosed, where appropriate.
     
    View the report.
  • Final Report on the Enforcement Actions Following the Failure of HBOS Published
    11/19/2015

    The final Report into the Financial Services Authority's enforcement actions following the failure of HBOS plc, prepared by Andrew Green Q.C., was published by the Prudential Regulation Authority and the Financial Conduct Authority. The Report assesses the reasonableness of the scope of the FSA's enforcement investigations in relation to the failure of HBOS from October 1, 2008 to September 12, 2012 and concludes that the scope was not reasonable, that the FSA's decision-making process was materially flawed and that the FSA should have conducted a wider investigation or series of investigations into the conduct of the HBOS Corporate Division and Mr Cummings, CEO of the Corporate Division at the relevant time. Recommendations include: (i) the regulators should have a system for pre-referral decision-making through which they identify and record the potential individuals that could be the subject of enforcement action related to an event/s, including reasons. One individual at the regulator/s should be made responsible for the pre-referral decision-making process; (ii) there should be an ongoing dialogue between Supervision and Enforcement, including discussions on the appropriateness of the scope of the investigation and any decisions should be recorded; (iii) the Memorandum of Appointment of Investigators issued to individuals by the regulators should include a summary of the potential breaches and an explanation of the matters that give rise to those alleged breaches; and (iv) the minutes of a regulators' Executive Committee meetings should be subject to review and approval. The Report also recommends that the PRA and FCA consider whether to investigate other former senior managers at HBOS with a view to prohibition proceedings.
     
    View the report.
  • European Commission Takes Action Against Six Member States for Failing to Implement Bank Recovery and Resolution Directive
    10/22/2015

    The European Commission announced that it had referred the Czech Republic, Luxembourg, the Netherlands, Poland, Romania and Sweden to the Court of Justice of the EU for failing to transpose the Bank Recovery and Resolution Directive into national legislation.  The BRRD was due to be transposed by all EU Member States by December 31, 2014. The referral follows a request in May 2015 by the Commission to eleven Member States, including the above six Member States, to fully implement the BRRD.

    View the press release.
  • Report on Credible Deterrence in the Enforcement of Securities Regulation
    06/17/2015

    The International Organization of Securities Commissions published a report on credible deterrence in the enforcement of securities regulation. With the objective of promoting awareness of deterrence, the report sets out the following as factors that may lead to credible deterrence of misconduct in the securities and investment markets if adopted by regulators: (i) legal certainty of the consequence of misconduct; (ii) detecting misconduct by being well connected and getting the right information; (iii) co-operation and collaboration between regulatory authorities; (iv) bold and resolute enforcement in investigations and prosecution of misconduct; (v) strong punishments which ensure that there is no profit from misconduct; (vi) promoting public understanding; and (vii) good regulatory governance.

    View the report.
    Topic : Enforcement
  • Enforcement Powers over Auditors and Actuaries Granted to UK Regulators
    01/27/2015

    HM Treasury published the Financial Services and Markets Act 2000 (Regulation of Auditors and Actuaries) (PRA Specified Powers) Order 2015 together with an explanatory memorandum. The Order gives effect to enforcement powers previously granted to the Prudential Regulation Authority over auditors and actuaries under the Financial Services Act 2012. The PRA was not able to use these powers until HM Treasury granted effect to those powers under this Order. The Order allows the PRA to apply dissuasive sanctions such as monetary fines or disqualification measures on auditors and actuaries that breach PRA rules or statutory duties. The PRA intends to issue further guidance on the use of these enforcement powers following a consultation. The Order enters into force on February 20, 2015.

    View the Order.

    View the Explanatory Memorandum.
    Topic : Enforcement