Financial Services - Written by on Wednesday, January 21, 2015 13:38 - 0 Comments

FCA and SEC to target bribery in crackdown on financial services firms

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Ruck_Michael_140xBy Michael Ruck, Senior Associate Pinsent Masons (formerly with FCA enforcement)

In the spirit of regulatory togetherness the SEC and FCA have both announced they will focus on financial crime, including bribery and sanctions breaches, within the financial services industry.  The story was covered in some detail in the Financial Times.

This will result in an increase in the number of investigations of senior management, greater prosecutions of individuals, a focus on firm systems and controls and investigation of potentially fraudulent accounting procedures (the FCA recently passing on its investigation of Tesco in favour of allowing the SFO to investigate).

Whilst the FCA is likely to refer any criminal prosecutions in the UK to the SFO to ensure its general desire to see senior management behind bars rather than facing fines alone, the spirit of international co-operation is being touted as extremely strong following the work on the Libor and FX investigations.  The level of financial penalties being imposed as a result of these investigations and the co-operation between regulators is seen as a significant motivation for those same regulators to work more closely together.

Whilst co-operation has not always been evident between regulators, with individuals being charged by more than one regulator regarding the same alleged misconduct, the rhetoric suggests this should become a thing of the past.

Only time will tell if the political and reputational kudos of regulators taking action in a co-ordinated manner will outweigh the benefit which may be gained by an individual regulator ploughing their own furrow (a la the New York Department of Financial Services on the recent FX manipulation fines).

The general message for financial services firms and their senior management is to get your house in order as more than one regulator is likely to come knocking!


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