FCA continues consumer duty drive
The Financial Conduct Authority (FCA) has gathered all its recent Dear CEO letters in its education campaign to remind regulated firms of the new consumer duty regime. The letters, 19 in all, are focused on particular sectors. Consumer Duty introduces a more outcomes-based approach to consumer protection and sets higher expectations for the standard of care that firms give customers. The FCA claims the Duty will lead to a simplified and less reactive form of regulator, which will allow firms to innovate and compete more effectively.
SEC freezes assets and shuts down crypto firm
The Securities and Exchange Commission (SEC) has announced emergency action against investment adviser BKCoin Management and one of its principals, Kevin Kang, in connection with an alleged fraud scheme.
The SEC alleges that Miami-based BKCoin Management raised $100 million from at least 55 investors to plug into cryptocurrency but diverted some of the funds “to make Ponzi-like payments.”
The SEC has also accused Kang of misappropriating at least $371,000 in customer funds and then using the money to purchase holidays, event tickets and apartment rental.
OCC acting comptroller speech on global banking
Michael J Hsu, acting comptroller of the OCC (Office of the Comptroller of the Currency) spoke in Washington about global banking regulation referencing how the failure of the Bank of Credit and Commerce International (BCCI) in 1991 led to significant changes in how global banks are supervised. He drew comparisons between BCCI and cryptocurrency exchange FTX and offered thoughts on what lessons this may hold for crypto advocates and policymakers.
“To be trustworthy, global crypto firms need a lead regulator who has authority and responsibility over the enterprise as a whole,” said Hsu. “Until that is done, crypto firms with subsidiaries and operations in multiple jurisdictions will be able to arbitrage local regulations and potentially play shell games using inter-affiliate transactions to obfuscate and mask their true risk profile.”
SEC charges Rio Tinto with bribery controls failures
The Securities and Exchange Commission (SEC) has charged global mining and metals company, Rio Tinto for violating the Foreign Corrupt Practices Act (FCPA) arising out of a bribery scheme involving a consultant in Guinea. The company has agreed to pay a $15 million civil penalty to settle the SEC’s charges.
In July 2011, a French investment banker and close friend of a former senior Guinean government official as a consultant was hired by Rio Tinto to help the company retain its mining rights in the Simandou mountain region in Guinea. The consultant began working without a written agreement defining the scope of his services or deliverables. Eventually the mining rights were retained, and the consultant was paid $10.5 million for his services, which Rio Tinto never verified. The SEC’s investigation uncovered that the consultant, acting as Rio Tinto’s agent, offered and attempted to make an improper payment of at least $822,000 to a Guinean government official in connection with the consultant’s efforts to help Rio Tinto retain its mining rights. “Even well-designed controls need committed managers to be effective,” said Charles E. Cain, Chief of the SEC Division of Enforcement’s FCPA Unit. “Here, deficient controls were no match for managers determined to hire a consultant whose only ostensible qualification was a personal relationship with a senior government official.”
A selected summary of key developments for regulated financial institutions
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