The Times
July 7, 2009
Similarly, in investment banking, a fine of a couple of million or so was no more than the bonus of a middling managing director. Why on earth in an industry, where money ranks first, second and third in management priority, did the FSA seriously think that such piddling flea bites would make senior management take compliance more seriously?
On insider dealing, its questionable, however, whether the threat of larger fines will be so effective. Of much greater deterrent effect would be if the FSA actually caught, prosecuted and jailed some of the big fish.
There is one other proviso. In cases where shareholders have been misled, the case for bigger fines falls down. The biggest FSA fine ever was a £17 million penalty meted out to Shell for misleading its own shareholders. Since no Shell manager was successfully pursued, the consequence was that the shareholders, the victims of the scandal, ended up indirectly paying the fine.
The Americanisation of the FSA continues apace. It is already pushing ahead with plans to offer witnesses immunity from prosecution in order to nail wrongdoers. Now it is wielding SEC-style fines.
There is one other plus. The fines are ringfenced and used to offset the FSAs industry-wide levies. With these set to soar as the FSA flexes its post-crunch muscles, those who stick to the straight and narrow deserve every little concession going.
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