Macquarie Fined for Control Failings

Macquarie Fined for Control Failings

The UK’s Financial Conduct Authority has fined Macquarie £ 13 million for poor controls in relation to a trader fraud. Here we go again – another control story. As internal auditors, the temptation is to “tut tut”. Before we do this, we really should ask the question – what could have been done better from a cultural perspective? Anyway – here are the details. The fraud related to 400 fictitious trades engineered by Travis Klein, a trader on the bank’s metals and bulk trading desk. He managed to by-pass the daily profit and loss controls by arranging for falsified broker quotes to value his positions. The fraud went on for 20 months before it was detected. Mr. Klein has now been banned from the industry having cost the bank $60 million to unwind his positions. Want to know more about cultural controls in relation to fraud? Please e-mail [email protected]

UK Changes Bonus Rules

The Prudential Regulation Authority has announced proposed changes to the bankers’ bonus rules. They are designed to simplify the regulations whilst encouraging prudent behaviour. The maximum deferral period will be reduced from seven to five years. The definition of “material risk takers’ to whom these rules apply will be modified. Bankers will be able to receive some bonuses in year one and will be able to benefit from dividends on share-based schemes immediately. The clawback provisions will be widened to individuals with oversight responsibilities.

UniCredit Offer Rejected

Banco BPM has rejected a Euro 10.1 billion offer from UniCredit. The board stated that the terms of the offer was unusual and did not reflect the profitability and future prospects of the bank. The Italian government has also stated that it has not agreed to the takeover. UniCredit continues to fight on two fronts as it stalks Commerzbank.

Car Finance Claims Double

The UK’s Financial Ombudsman Service has announced that complaints concerning car finance have more than doubled in the last year. The total number of cases has reached 73,652 following a UK Court of Appeal ruling that brings into question the transparency of commission sharing arrangements between banks and car companies. Total compensation could hit £23 billion.