This edition covers developments between 1 November and 30 November.
FATF Reviewing Its Recommendations to Increase Transparency
On 3 November, the Financial Action Task Force (FATF) of the Organisation for Economic Co-operation and Development published a speech given by Paul Vlaanderen, FATF President, on 30 October, entitled “The Need for Enhanced Transparency”. The speech focused on the need, emphasised by the current global financial crisis, to ensure that the vital parts of the FATF standards which are linked to transparency issues are fully effective. President Vlaanderen stated that FATF is reviewing three transparency related issues:
To read the speech in full, click here.
Regal Petroleum Plc Fined £600,000 by LSE
On 17 November, the London Stock Exchange (LSE) fined Regal Petroleum plc (Regal), a company listed on the Alternative Investment Market (AIM), the LSE’s secondary market, £600,000. The sanction was imposed for numerous serious breaches of AIM’s rules.
In particular it was found that on 11 separate occasions, Regal breached AIM Rule 9 by failing to take reasonable care to ensure that its announcements were not misleading, false or deceptive and did not omit material information. In a period running from 2003 to 2005, Regal had made a series of announcements to the market about a drilling opportunity in the Aegean Sea. During this period Regal’s share price rose by almost 500% and it raised over £100 million through three separate placings on AIM. In May 2005, Regal announced that following testing on the drilling opportunity, the well was “non-commercial”. As a result Regal’s share price immediately fell by 61% amid significant press coverage, and the LSE initiated an investigation. The fine imposed is the highest in the history of AIM.
To read the LSE’s announcement in full, click here.
FSA Fines Former Stockbroker £24,000 for Market Abuse
On 17 November, the Financial Services Authority (FSA) published the final notice which it has issued to Alexei Krilov-Harrison, a former stockbroker at Pacific Continental Securities UK Ltd. The FSA has fined Mr. Krilov-Harrison £24,000 for market abuse relating to the use of inside information.
The FSA had found that Mr. Krilov-Harrison had received inside information about a publicly traded company relating to a major contract it was about to sign. During the 24 hours following receipt of this information, Mr. Krilov-Harrison encouraged several of his clients to invest in the company using the inside information as a sales tactic. The FSA found that Mr. Krilov-Harrison’s actions were deliberate and motivated by a desire for profit.
To read the FSA’s notice in full, click here.
Government Announces Financial Services Bill
A new Financial Services Bill is one of the measures announced by the Government for the new parliamentary session. The main elements of the Bill announced on 19 November include:
To read the announcement from the Government in full, click here.
Walker Review Recommends Major Reforms to Bank Corporate Governance
On 26 November, HM Treasury published the final report and recommendations of Sir David Walker on the reform of corporate governance of the UK banking industry (the Walker Review).
The Walker Review was commissioned in February 2009 by the Chancellor of the Exchequer, the Secretary of State for Business, Innovation & Skills, and the Financial Services Secretary to the Treasury. Its terms of reference were to examine corporate governance in the UK banking industry and make recommendations in areas including the following:
The Walker Review published a preliminary report on 16 July, after which followed a substantial consultation process with industry stakeholders and other interested parties. The 39 recommendations in the final report are intended to improve the performance of bank boards, increase the transparency of employee remuneration and incentives, and encourage institutional shareholders to become more involved.
Specific recommendations include:
The final report omits a number of proposals which were in the preliminary report. Proposals that will not now be taken forward include having large investors subject to questioning by the FSA on their motives for selling bank shareholdings, and requiring institutional investors to enter into memoranda of understanding on collective corporate governance action.
The Chancellor of the Exchequer, Alistair Darling, said: “The Government strongly supports [the Walker Review] recommendations and will take steps to implement them as soon as possible.” It is expected that new regulations to put the Walker Review recommendations into force will be introduced early in 2010.