Corlytics Barometer: Conduct 2018

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Corlytics has compiled a series of other reports which cover key global regulatory themes, such as economic crime and market conduct.

Market Conduct report

2012- Q3 2017

Economic Crime report

2012 – H1 2017

Corlytics Barometer - Market Conduct report 2012- Q.3 2017

MARKET ABUSE AND DISCLOSURE MAKES UP 85% OF FINES

Issues in relation to market abuse and disclosure to the market accounted for almost 85 percent of the value all market conduct fines. US regulators are predominantly responsible across most regulatory categories for enforcement activity. However, for issues relating to anti-competitive behaviour, the US was only responsible for 25 percent of the fines. For this category, German regulators were responsible for around 35 percent of the enforcements, with France and the UK responsible for a fifth each.

The data illustrates that there was a significant peak for conduct issues in 2015, with a big drop in both the value of and the number of fines.

Although 2016 saw a significant drop in market conduct fines, the number of fines has increased again over the last 12 months.

US AND UK REGULATORS GETTING TOUGH ON MARKET CONDUCT ISSUES

Conduct issues are high on the agenda in the US and the UK. The Securities and Exchange Commission (SEC) and Commodity Futures Trading Commissions (CFTC) are responsible for 20 percent of all enforcement actions globally. The Department of Justice (DoJ) was responsible for over USD 6bn in fines against organisations and individuals. This was followed closely by the CFTC, with USD 5bn in fines. The New York State Department of Financial Services (NYDFS) and the SEC both handed out fines of over USD 1bn for market conduct issues during the period. The Financial Conduct Authority (FCA) in the United Kingdom also handed out fines for conduct issues of over USD 3.1bn during the period.

US REGULATORS CRACK DOWN ON EUROPEAN BANKS

Seven European banks were responsible for 45 percent of all US fines (USD 20bn) from 2012 in relation to market conduct. Many of these fines have originated from rigging the foreign exchange markets. What is interesting for institutions is the quantum of the fines. Two US institutions were fined over USD 2bn by US regulators. Not to mention three European institutions were fined over USD 2bn by US regulators. This illustrates that the US regulators are treating foreign and domestic banks in similar ways for similar issues.

ASIAN REGULATORS ARE BECOMING MORE ACTIVE

The data illustrates just how strongly the Asian regulators are concentrating on market conduct issues. For instance, the Asian jurisdictions with the most active regulators (Australia, Hong Kong, and Singapore) are bringing large numbers of cases for market conduct issues. Even though the fines tend to be greater in Europe and the US, Asian regulators are more active across the period.

Australian regulators have brought almost twice the number of market conduct enforcements actions (131) across the period as the UK (74), with the Hong Kong regulators (89 cases) regulator (HKSFC) also out stripping its UK counterparts. Singapore comes in at just under the UK count at 55 but is far ahead of all other European regulators.

139 MARKET BANKS IN LAST FIVE YEARS

In terms of non-financial consequences, market bans are the sanction that are most usually imposed by regulators. Accounting for almost 30 percent of non-financial consequences, there have been 139 market bans in the period. Furthermore, there have been 28 enforcements actions where imprisonment has been imposed in the period.

NON-FINANCIAL FIRMS AT MERCY OF REGULATORS

Conduct issues that have been in play within financial institutions are now coming to the foreground in other organisations. For instance, this year there has been an increased focus on non-financial firms in relation to issues on disclosure to the market. Of the 34 enforcements across global regulators for issues related to disclosure, 33 of them have been against non-financial institutions, including technology firms, pharmaceutical companies, ratings agencies and individuals.


The full report with all the financial data is available here: Corlytics market_conduct_report_2017

Corlytics Barometer - Economic Crime report (H2 2017)

Economic crime makes up 18 percent of all enforcement fines, we take an in-depth global look at what is happening in this category.

 

  • Global regulators have levied over USD $38.4bn in economic crime fines since Jan 2012
  • 97% of all fines from US regulators
  • UK, French, German and Swiss banks with branches in the US have paid almost 40% of the fines related to economic crime in the US
  • Top 10 European banks have paid USD $13.25 billion to US regulators since 2012
  • Average fine for European firms to US regulators is 10x the average of US firms
  • Economic crime makes up 18% of all regulatory enforcement fines in the period: 927 cases

 

New data from Corlytics, the global leaders in regulatory risk intelligence, shows that European banks are under disproportional enforcement pressure from US regulators. Since 2012, of the $38.4bn levied in economic crime fines worldwide, 97 percent of all fines have come from US regulators. With the average fine for European banks being ten times the amount US banks have been served.

The Corlytics Barometer, which this issue focuses on economic crime globally, reveals that enforcement action for sanctions and tax evasion are exclusively handed out by US regulators, whereas bribery and anti-money laundering AML are higher up the watch list for European and Asian regulators.

Although the number of fines have increased over the last 12 months, the average value of each fine has decreased. This is due in some part to a few very large fines issued by the US regulators (predominantly the Office of Foreign Assets Control) in 2014. These were mainly for sanctions and Anti-Money Laundering and Banking Secrecy Act (AML/BSA) breaches.

The full report with all the financial data is available here: Corlytics Economic_Crime report 2017