In the last year, the Financial Conduct Authority has received 1,008 requests from overseas regulators for assistance with their enquiries and investigations. This is an increase of 11 per cent on the the previous year, where the figure stood at 885.
It has been speculated that the rise was driven by an increase in “complex” cross-border investigations into regulation, which requires multiple regulators from different jurisdictions to work together. For example, the recent string of investigations into potential manipulation of global interest rates and currency markets would require cooperation between many financial regulators.
One of the implications of this increase is the cost, which continues to rise with the increasing number of requests added to the fact that much of the overseas investigations overlap.
The most frequent requests come from the United States, which makes up 23 per cent of all FCA investigation overseas assistance requests - this was a total of 222 requests from US enforcement agencies last year. This is significant for businesses as UK-based firms facing accusations of regulatory wrongdoing can face much higher costs if the US authorities establish jurisdiction over actions that occurred place in UK based business premises.
A good example is last September when US and UK regulators collected $920m (£548m) of fines from JP Morgan over the “London whale trade” which included a £137.6m fine from the FCA. Co-director of the US Securities and Exchange Commission’s division of enforcement, George Canellos, said;
“Complex cases…involving cross-border conduct … cannot be effectively investigated and prosecuted without close cooperation of financial regulators in different countries.”
However, it is important that FCA budgets and resources do not become overstretched, and as a result UK matters become neglected. Many of the investigations to be carried out overseas are highly technical and could take months or even years to be completed and the FCA forms an important part of completing these investigations.
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This blog post is intended as a news item only - no connection between Lewis Nedas and the parties concerned is intended or implied.