Your next CUBE RegNews will be published on 9th May.
FCA fines Banque Havilland £10 million
The Financial Conduct Authority (FCA) has fined Banque Havilland £10 million and banned three former employees from working in financial services.
The FCA found that between September and November 2017, Banque Havilland created and disseminated a document that contained manipulative trading strategies aimed at devaluing the Qatari Riyal and breaking its peg to the US Dollar. The objective was to harm the economy of Qatar.
The FCA found that Mr Edmund Rowland, the former London branch CEO, tasked Mr Bolelyy, a former London branch employee, to draft the document and Mr Weller, a former London branch senior manager, made a significant contribution to the content. Later, Mr Edmund Rowland and Mr Bolelyy disseminated the document, including by providing a copy to a representative of an Abu Dhabi sovereign wealth fund.
The FCA considers that Mr Edmund Rowland, Mr Weller and Mr Bolelyy failed to act with integrity and that they are not fit and proper persons to perform any function in relation to any regulated activities.
The FCA’s view, the actions of Mr Edmund Rowland and Mr Weller are particularly serious, as both held positions of significant influence and were involved in the creation of the document.
Therese Chambers, Executive Director of Enforcement and Market Oversight at the FCA, said:
‘Banque Havilland’s conduct actively encouraged the commission of financial crime, providing ideas for manipulative trading to someone it saw as having the political motivation to be potentially interested in such ideas. It barely needs stating, but such conduct is completely unacceptable.
The FCA’s decision sends a clear message that it will not tolerate market abuse or those who seek to harm the financial system.
Banque Havilland, Edmund Rowland and Vladimir Bolelyy have referred their Decision Notices to the Upper Tribunal where they will each present their case.
PRA issues consultation on its approach to enforcement
The Prudential Regulation Authority (PRA) has issued CPO9/23: The Bank of England’s approach to enforcement: proposed changes and clarifications, which proposes changes to the Bank of England (the Bank) and the Prudential Regulation Authority’s (PRA) enforcement policies and procedure.
The proposed amendments aim to clarify and streamline the enforcement powers of the Bank of England and the PRA. This includes consolidating existing enforcement policies and procedures into a single document, moving sections relating to statutory tools into a separate policy, incentivizing cooperation during investigations, clarifying approaches and procedures for FMI enforcement investigations, updating the Enforcement Decision Making Committee’s (EDMC) remit to include additional enforcement powers, and refining the EDMC’s procedures based on practical experience. The changes are intended to improve operational efficiency and advance the PRA’s statutory objectives.
Sam Woods, Deputy Governor for Prudential Regulation and Chief Executive Officer of the PRA, said:
“Since the PRA was established 10 years ago, we have delivered 25 enforcement outcomes against firms and individuals. This experience has allowed us to review the Bank’s enforcement policies to ensure they are clear and enable efficient, effective enforcement outcomes aligned with our statutory objectives. The changes we are consulting on include the creation of options for quicker investigatory outcomes, by providing a new route for early cooperation and increased incentives for earlier admissions by subjects”.
The consultation is aimed at PRA-authorised banks, building societies, PRA-designated investment firms, FMIs, qualifying parent undertakings, auditors, and senior employees of those entities (including, but not limited to, authorised senior management function holders and certified employees under the Senior Managers and Certification Regime (SM&CR)).
The consultation closes on Friday 4 August 2023.
SEC settles charges against firm for breach of fiduciary duty
The Securities and Exchange Commission (SEC) has settled charges against Classic Asset Management LLC (CAM) and investment adviser representative Douglas G. Schmitz for breach of fiduciary duty in connection with the use of leveraged exchange traded funds (ETFs) in discretionary client accounts.
From at least 2017 through December 2020, CAM and Schmitz invested advisory clients in leveraged ETFs for extended periods of time, often in significant concentrations, despite warnings in the funds’ prospectuses that the products carried unique risks and required frequent monitoring. The SEC found that CAM and Schmitz lacked a reasonable belief that the leveraged ETFs were in their clients’ best interests and failed to appropriately monitor the performance of these products. The SEC’s order finds that CAM and Schmitz violated the Investment Advisers Act of 1940, and they have agreed to a cease-and-desist order, censures, and to pay fines and disgorgement. CAM also agreed to conduct a respondent-administered distribution.
A selected summary of key developments for regulated financial institutions
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