Financial Regulatory Forum

By Emmanuel Olaoye

WASHINGTON, Aug. 31 (Thomson Reuters Accelus) – Directors who fail to take an interest in compliance risk the threat of enforcement action from the Securities and Exchange Commission, a top official from the agency said.

In an interview with Thomson Reuters, Carlo di Florio, director of the SEC’s Office of Compliance Inspections and Examinations, said the agency was focused on developing an examination regime that looked at a company’s culture of compliance at every level of management. Board members who are not engaged in the compliance process risk the chance of their firm being referred to the SEC’s enforcement division for fraud or compliance failures. (more…)

By Martin Coyle

LONDON/HONG KONG, Aug. 31 (Thomson Reuters Accelus) – Standard Chartered Bank’s major shareholders are declining to openly criticise the firm’s compliance practices but some cited overall governance issues as their primary interest following its settlement over allegations it breached Iran-sanctions laws. One institutional investor said that it had discussed compliance issues with the bank before this month’s $340 million settlement was reached with New York’s Department of Financial Services (DFS) for breaches of sanctions with Iran. The UK fund manager, which declined to be named, said that it discussed the allegations in general as well as compliance issues.  (more…)

By Rachel Wolcott

LONDON/NEW YORK, July 30 (Thomson Reuters Accelus) - Risk managers could benefit from the financial services industry’s revamp of collateral management services in preparation for the new regulatory requirements that will drive demand for high-quality collateral. New regulations for the clearing of over-the-counter (OTC) derivatives through central counterparties (CCPs) alone could increase demand for high-quality collateral to $2 trillion or more, according to some estimates. In response, some firms are aiming for a more universal approach to collateral management.

Many firms still take a rather old-fashioned view of collateral management. It is often fragmented and inefficient. Most firms operate collateral management in silos determined by geography or asset class. This can lead to poor communication between different collateral management functions — for example, repo staff might not speak to the securities lending unit, or the New York office might not speak to its UK counterpart as much or as often as it should.  (more…)

By Nick Paraskeva

NEW YORK, July 17 (Thomson Reuters Accelus) - The CFTC approved tough customer protection rules for futures firms’ days after the Peregrine default led to over $200 million in missing client funds. Losses arising from a fraud by the owner of the futures broker come soon after a $1.6 billion hole in client funds from the collapse of MF Global. The new rules require daily calculations of client money to be reported, and for senior management to certify cash movements.

The CFTC charged Peregrine Financial Group, and its owner Russell Wasendorf, Sr, of misappropriating customer funds. A recent audit of Peregrine by the National Futures Association (NFA), the self-regulator for independent futures firms, found the firm falsely represented it held $220 million customer funds at a bank account, which only had $5.1million. The firm filed for liquidation Friday, and its owner was arrested. (more…)

By Alex Lee

NEW YORK, Oct. 12 (Business Law Currents) - The first half of 2011 saw rebounding credit markets and an uptick in debt issuance. Due to uncertain economic conditions in the second half of 2011, however, even the most fundamental aspects of loan documentation are facing increasing scrutiny. Representations & warranties that were more routine and non-contentious transformed into significantly stricter provisions as a result of the credit crisis.

Gun shy lenders began placing more onerous terms in credit facilities and the reps and warranties were dramatically bulked up. Some borrowers are now required to announce their credit worthiness under no uncertain terms. Recent litigation concentrating on reps and warranties has heightened the already palpable sense of market unease. Lenders are escalating the investigative function of the reps & warranties to more fully flesh out the factual matrix in reliance of which they will decide to provide a credit facility. (more…)

By Susannah Hammond

LONDON, Feb. 24 (Complinet) -The British Treasury’s latest proposal for reshaping financial regulation, published last week, has given more detail to the plans set out in an outline last summer. The fundamental shape of the new bodies now looks to have been finalized, but many fine points on how the new approach will actually function in practical, operational and cultural terms are still under consideration.

Following is a discussion of the major elements of the consultation, “A new approach to financial regulation: building a stronger system,” and how they may affect the UK financial industry:

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