More On Legal & Compliancefrom The Advisor's Professional Library
- The Few and the Proud: Chief Compliance Officers CCOs make significant contributions to success of an RIA, designing and implementing compliance programs that prevent, detect and correct securities law violations. When major compliance problems occur at firms, CCOs will likely receive regulatory consequences.
- Conducting Due Diligence of Sub-Advisors and Third-Party Advisors Engaging in due-diligence of sub-advisors isnt just a recommended best practice it is part of the fiduciary obligation to a client. An RIA should be extremely reluctant to enter a relationship with a sub-advisor who claims the firms strategy is proprietary.
The European Commission (EC) has begun discussions with the financial industry to determine a means of subjecting benchmark indices to restrictions that will make them less prone to manipulation, even as regulatory filings reveal that Barclays terminated a trader and an executive at the end of July for their roles in LIBOR fixing.
Reuters reported Wednesday that the EC issued a report, along with a public questionnaire, that expressed its concerns over manipulation of benchmark rates such as the London interbank offered rate (LIBOR) and also laid out its intent to impose restrictions on how the rates are compiled and put into effect.
"The international investigations underway into the manipulation of LIBOR have revealed yet another example of unacceptable behavior by banks," said a statement by Michel Barnier, the European commissioner in charge of regulation. He continued: "Wider work is required to regulate how indices and benchmarks are compiled, produced and used."
The LIBOR scandal is apparently not finished with Barclays yet, either, even after claiming three of its top executives. Regulatory filings from the bank showed that on July 29, FINRA was notified that the executive, a managing director and for six years head of U.S. interest rate trading in New York, Ritankar "Ronti" Pal, was "discharged" on July 30.
According to the filing, Pal’s departure was due to the fact that the bank had a "loss of confidence" in him as a manager for failing "to properly supervise individuals on his team," according to one of the filings. While Pal’s exit from the bank had been reported earlier, no reason had been provided.
Another filing revealed that on July 30, Dong (Don) Kun Lee, a New York-based derivatives trader who reported to Pal, was also terminated, for allegedly engaging "in communications involving inappropriate requests relating to LIBOR."
Such regulatory filings, with their disclosure of the reasons for staff departures, are not normally made public, according to the report, and were provided by a source.
In a statement that did not directly mention the actions taken toward either Pal or Lee, Barclays said that "the firm undertook a thorough and robust internal disciplinary process promptly following the regulatory review, which was completed in late July."