In Ireland, former Anglo Irish Bank Chairman Sean Fitzpatrick was acquitted of criminal charges in the Dublin courts. Meanwhile Taoiseach Enda Kenny stepped down and prompted a leadership race in the Fine Gael party between Leo Varadkar and Simon Coveney to succeed him. In the UK, Prime Minister May’s commanding opinion poll lead was significantly reduced by the Labour Party, just a week ahead of the election. The last shares of Lloyds Bank held by the UK Government since the financial crisis were sold into the market. Italy sought to reassure markets that it had all the public guarantees necessary to protect Banca Popolare di Vicenza and Veneto Banca. A cyber-attack using ransomware had a significant effect on institutions across the globe. Below we bring you the stories in finance and regulation from the last two weeks.


   Ireland

The Central Bank held a roundtable discussion on Brexit with consultants and legal experts, looking at the work of advisors who are working with UK firms considering relocation in Ireland. Leading law, accountancy and consultancy firms heard about the Central Bank’s response to the challenges and risks of Brexit. The Central Bank emphasised the European-wide response to the issue, particularly through the European Central Bank and the three European Supervisory Authorities.

The Data Protection Commissioner issued an update on readiness for the General Data Protection Regulation, which showed just 14% of Small and Medium Enterprises have begun to get ready for implementation next year. 83% of persons surveyed were unable to name any GDPR changes to their business. An awareness campaign has been launched at www.GDPRandYou.ie.

The Pensions Authority alerted trustees to issues of consent where they issued statutory information in electronic form. Trustees were advised to consider whether electronic communications were appropriate, in the context of members being able to make appropriate and fully informed decisions. The Authority expressed the view that a non-response to a notice should not illustrate consent.

The Department of Finance published a review of the Irish Betting Tax regime, as part of the Tax Strategy Group process for 2017. The review is looking the extension of the tax regime to remote bookmakers and betting exchanges. Questions asked include whether turnover tax is the most appropriate model for betting exchanges and whether the bookmaker or the punter should be taxed. Views have been requested for 19th June 2017.

The Bank of Ireland was fined €3.15m by the Central Bank for failures relating to money laundering regulations, including around reporting suspicious transactions. The Central Bank cited a high volume and range of breaches which pointed to significant weaknesses in the bank’s implementation of those regulations. The fine is the second largest issued by the Central Bank, behind the €3.325m fine issued to Ulster Bank for similar infringements.


   Europe

The FX Global Code, a set of global principles of good practice in the foreign exchange market, was published, following collaboration by central banks and market participants from 16 jurisdictions. The Global Code is intended to serve as a supplement to local laws and regulations by identifying global good practices and process, but does not impose legal or regulatory obligations. It identifies six leading principles on ethics, governance, execution, information sharing, risk management and settlement processes.

The European Court of Justice rejected an application by Landeskreditbank Baden-Württemberg that it should not be directly supervised the European Central Bank. The German bank had claimed that it was not a ‘significant entity’ under the Single Supervisory Mechanism as its business model was low risk and no threat to the stability of the European financial system. The bank met the €30bn threshold but was not able to demonstrate that there were any specific factual circumstances as to why it would be better regulated by only the German authorities.


   United Kingdom

The Pensions Regulator gave warning that it will take a tougher line on companies which prioritise shareholder dividends over reducing pension deficits. In a focus on ‘fair treatment’, the regulator highlighted that pension deficits of defined benefit schemes had a shortfall of £530bn. Where employers pay more to shareholders than to fund deficit schemes, the regulator will require a deficit reduction plan that is based on more than investment out-performance in future years.

The Central Criminal Court made confiscation orders against two persons convicted of involvement in unauthorised collective investment schemes. Scott Crawley, a salesman, and Dale Walker, a conveyancing solicitor, were part of the prosecution of eight individuals involved in the sale of agricultural land known as Operation Cotton. The proceeds of the orders will be returned to investors who were defrauded. In all, confiscation orders in the case amounted to £2,195,496.

Barclays Bank faced a claim in the High Court in London seeking £1.1bn damages from the purchaser of its sub-prime credit card business in 2007. CCUK Finance purchased Monument from the bank and were claiming compensation in relation to the mis-selling of payment protection insurance. Meanwhile the last claims against the Royal Bank of Scotland’s rights issue in 2008 came close to the door of the courts, before the Bank stepped up its efforts to settle with claimants. A trial would see former chief executive Fred Goodwin giving evidence and was reported to be potentially embarrassing to RBS.


   International

The China Securities Regulatory Commission fined three of the country’s largest brokers for facilitating bearish bets on the stock market during the 2015 market rout. Citic Securities, Guosen Securities and Haitong Securities were all fined following an investigation into ‘malicious short sellers’, which included trading by US-based Citadel Securities. Citic and Guosen were cited for breach of a regulation preventing the lending cash and securities to clients which had not traded consistently for the previous six months; Haitong Securities made a false disclosure when opening an account for Citadel which allowed it to avoid complying with the six month rule.

Litigation in the United States has drawn attention to the legality of the Securities and Exchange Commission’s administrative courts. Ray Lucia has challenged the constitutional right of the regulator to bar him from the investment business for life. A federal appeals court in the District of Columbia agreed with Mr. Lucia that the regulator's internal judges were officers of the United States who had to be appointed by the president or by five commissioners rather than being hired by the personnel office. Ninety per cent of cases brought by the regulator were referred to its in-house courts in 2016.

Topics covered by Better Regulation include
  • AIFMD
  • BRRD
  • Banking Structural Reform
  • Basel
  • Benchmarks Regulation
  • Brexit
  • Capital Markets Union
  • Capital Requirements Legislation
  • Central Securities Depositories Regulation
  • Credit Rating Agencies Regulation
  • Deposit Guarantee Schemes Directive
  • Dodd-Frank
  • EMIR
  • GDPR
  • Solvency II
  • Insurance Distribution Directive
  • Interchange Fees Regulation
  • Market Abuse/Insider Dealing
  • Markets in Financial Instruments Legislation
  • Money Laundering Directives
  • Money Market Funds Regulation
  • Mortgage Credit Directive
  • Payment Services Directive
  • PRIIPs Regulation
  • Prospectus Directive
  • Ring-fencing
  • Securities Financing Transactions Regulation
  • Securitisation Regulation
  • Senior Insurance Managers Regime
  • Senior Managers Regime
  • Undertakings for Collective Investment in Transferable Securities Directive