The Times: UK and US regulators to join forces against fraud

EXTRACT: The two groups are keen to build on their joint investigation into Shell in 2004, which led each to fine the oil company for dramatically overstating its hydrocarbon reserves.

June 26, 2007
Tom Bawden in Washington

Financial regulators on both sides of the Atlantic plan to collaborate more closely to create a united front against insider trading, as the growth of cross-border deals and innovations in technology transform corporate fraud into a global business.

Linda Thomsen, head of enforcement at the US Securities and Exchange Commission (SEC), told The Times that she was concerned by the growing confluence of hedge funds, private equity firms and investment banks as mergers and acquisitions became increasingly complex international transactions involving multiple parties.

Ms Thomsen, who runs a team of 1,000 investigators involved in 2,000 investigations at any one time, said: “We have concerns about market professionals – private equity, hedge funds and investment bankers – working on deals. They are probably all involved [in insider trading] and to a certain extent they all overlap.

“The more people with nonpublic information, the greater the potential for insider trading and there has been an uptick in cases involving market professionals in the last few months.” Ms Thomsen said that she talks to the Financial Services Authority (FSA) and other country watchdogs with increasing frequency, sharing information about specific cases, industry challenges, general trends and political and legal issues.

“We are in frequent talks with the FSA and we are keen to do more work with the FSA and any other overseas body so we can all enforce our respective laws. Fraud is global and so it is increasingly necessary to coordinate our activities. If we don’t, we won’t be effective,” Ms Thomsen said.

An FSA spokesman said that the group was “committed to cooperating with our international counterparts in relation to issues that have arisen from the increasingly global nature of financial services markets”. The two groups are keen to build on their joint investigation into Shell in 2004, which led each to fine the oil company for dramatically overstating its hydrocarbon reserves.

Ms Thomsen, who led the investigation into the Enron fraud in her previous position as an SEC associate director, joined the commission 12 years ago after stints as a lawyer in private practice in Washington and New York.

She said that technology has changed how financial fraud is executed and detected almost beyond recognition since she joined the commission.

“E-mails, in particular, have made an enormous difference, changing the way frauds occur and the way they can be traced,” she said.

http://business.timesonline.co.uk/tol/business/industry_sectors/banking_and_finance/article1985618.ece
 

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