So much for shiny, new Codes of Conduct.
Tidying up before the end of the financial year, JPMorgan Chase and the Securities and Exchange Commission (SEC) and the Futures Trading Commission (CFTC), agreed a fine of $307 million on the company and unusually an admission of wrongdoing .
Another day, another banking scandal!
Just this week, the New York State Department of Financial Services (NYDFS) hit Barclays bank with a huge fine of US$ 150 million, as a result of the bank admitting it had “engaged in certain misconduct regarding the trading of benchmark foreign exchange (“FX”) rates from at least 2008 through 2012 in violation of the New York Banking Law and other laws” .
On September 11th, twelve ‘Too Big To Fail’ (TBTF) banks reached an in principle settlement in a class action lawsuit to resolve investor claims that the banks conspired to fix prices and limit competition in the market for credit default swaps (CDS).
The historic settlement is estimated to cost some $1.865 billion which, as the claimants’ lawyers said , was “one of the largest antitrust class-action settlements” in the financial area.
Almost 10 years after the manipulation of the LIBOR benchmark was first detected to have happened (although there is ample evidence that misconduct had been going on for years prior to that) the first LIBOR trader, Tom Hayes, appeared in court this week .
In April 2015, two UK subsidiaries of the Bank of New York/Mellon (BNY Mellon) were fined some £126 million for failing to “consider properly the interests of their clients”. BNY Mellon is the largest custodian bank in the world and one of the world’s Systemically Important Banks (SIB).
But has BNY Mellon become Too Big to Care?
Both the Chairman and CEO of the banking behemoth HSBC have recently appeared before the Treasury Committee of the UK Parliament in connection with the Swiss Tax Scandal . The bank’s Board had previously issued an apology for the scandal to its shareholders and the public in general .
The argument made by the HSBC Board is basically “We didn’t know, how could we? We are a huge organization. It would not happen today”.
Ignorance is bliss.
In July 2104, the recently divorced Financial Conduct Authority (FCA) and the Prudential Regulatory Authority (PRA) came together once more to produce a Joint Consultation Paper entitled ‘Strengthening accountability in banking: a new regulatory framework for individuals’ . Following the scandals of the GFC, LIBOR and PPI, the regulators believe that holding “individuals to account is a key component of effective regulation”. The regulators pointed out that their extensive proposals were intended to “create a new framework to encourage individuals to take greater responsibility for their actions, and will make it easier for both firms and regulators to hold individuals to account”.
The key words throughout the consultation paper are ‘individual’, ‘responsibility’ and ‘accountability’.