Compliance Updater - July 2024

A summary of key compliance stories from around the globe in July.

1. UK FCA approves listing rules overhaul.
2. Bill Hwang found guilty of fraud and market manipulation.
3. FCA tells banks to treat politicians fairly.
4. UK financial services complaints up re DSARs.
5. Coinbase fined £3.5m by UK regulator over money laundering issues.
6. Rare “cold shoulder” penalty from UK Takeover Panel.
7. Short seller Andrew Left charged with securities fraud in the US.
8. Convicted sex offender dismissed from Goldman Sachs.

UK FCA approves listing rules overhaul.

The UK’s Financial Conduct Authority (FCA) has introduced significant changes to the UK listing rules from 29th July intended to make it more competitive as a listing venue, particularly for high-growth start-up companies. The changes see dual-class listings allowed for the first time, where some investors including founders, directors and institutions can hold super-voting rights.

Bill Hwang found guilty of fraud and market manipulation.

More than three years after his fund, Archegos, collapsed and left banks nursing billions of dollars in losses, Bill Hwang was found guilty of fraud and market manipulation in a New York court. Hwang’s fund amassed huge positions in specific companies using equity swaps through multiple brokers. He will be sentenced in October.

FCA tells banks to treat politicians fairly.

The UK’s FCA published its review after Nigel Farage’s “debanking” scandal into the treatment of politicians and their families. The review said “all firms could improve” the way they handle politically exposed persons (PEPs) and there was a need for better staff training and better communication when additional checks were conducted. Firms were also told to restrict who qualifies as a PEP to the tightest possible legal definition, and review promptly once they leave public office.

UK financial services complaints up re DSARs.

A freedom of information request submitted by KPMG discovered that complaints to the regulator (the ICO) over data subject access requests (DSARs) to financial services firms had jumped by 15% in the year to the end of April 2024. DSARs enable individuals to ask if firms are using and storing their personal data and request copies of this information.

Coinbase fined £3.5m by UK regulator over money laundering issues.

The UK’s FCA fined crypto exchange Coinbase’s UK subsidiary, CB Payments Ltd, £3.5m for providing services to more than 13,000 “high risk” customers. The FCA had raised issues with CB Payments Ltd in 2020 regarding its financial crime control framework, and it had agreed not to take on risky clients. Since then, it has onboarded 13,416 high-risk clients including persons on sanctions lists, politically exposed persons and some who declared themselves unemployed.

Rare “cold shoulder” penalty from UK Takeover Panel.

The UK’s Takeover Panel imposed its “cold shoulder” penalty against ten individuals that were connected with MWB Group. MWB Group was a listed company that went into administration in 2012 and was liquidated six years later. Between 2009 and 2010, as members of MWB’s management, the individuals concealed the fact that three of them controlled the company and also failed to make an offer that was required when their stake was increased over 30%. The individuals will be ostracised from the financial sector for between one and five years under the penalty.

Short seller Andrew Left charged with securities fraud in the US.

Andrew Left, the short seller behind Citron Research, was charged with 17 counts of securities fraud by the US Department of Justice. The charges estimate that the frauds generated around $16m in profits. According to the authorities, Left exited trades more quickly than his disclosed plans and also disclosed positions that were untrue.

Convicted sex offender dismissed from Goldman Sachs.

A 33-year-old banker working at Goldman Sachs in London was convicted in an Irish court in February 2024 of sexually assaulting his niece. The offence occurred some years ago when the banker was a juvenile and he pleaded guilty. However, he failed to notify his employer and in June, when the bank became aware of the offence, he was sacked. The banker had been certified by Goldman Sachs as fit and proper.