2015 will be the year that marks the end of major international regulatory reforms designed to lessen the occurrence of another financial meltdown and a renewed emphasis on ethics and customer responsibility. This article presents my ten regulatory risk insights for the Asia/Pacific region for this year, which include, culture, conduct risk, lines of management responsibility and accountability, customer disclosure, staff training and competency, AML (beneficial ownership), cyber security governance, anti – corruption, terrorist financing with particular emphasis on transactions in relation to ISIS, regulatory implementation and planning for final global reforms arising from the G20 summit.
The Serious Fraud Office (SFO) criminal prosecution against former UBS and Citigroup yen derivatives trader Tom Hayes was a resounding success in obtaining the unprecedented 14 year jail term for rigging Libor between 2006 and 2010. The verdict represents public sentiment against banks as much as the lone individual who was the first to stand trial in the most prolific financial rate rigging conspiracy in history. There is no doubt that Hayes is the first of a number of scapegoats for an array of international banks whose senior bankers have maintained the script “I know nothing” and walked away without liability leaving the traders – the more mid tier members of the organisations to take the fall.
The case of Tiger Asia Management LLC (Tiger Asia) shows that the Securities & Futures Commission of Hong Kong (HK SFC) has thrown down the gauntlet to foreign participants operating outside their jurisdiction, but who violate securities laws on their turf. Recently, the HK SFC was given the all clear by The Hong Kong Court of Final Appeal to proceed with its civil action for damages against Tiger Asia and its management for insider dealing on the Hong Kong Stock Exchange, even though the hedge fund is neither regulated, nor has any presence in the region.
Recent HK SFC action against Tiger Asia illustrates, that it not only acts as an enforcer, but is prepared to be a civil protector of collective interests for persons dealing on Hong Kong securities’ markets, who have been injured by regulatory misconduct by firms operating outside their jurisdiction. The message from the HK SFC is clear: if you violate our laws we will not hesitate to take civil action even if we don’t regulate you! This matter is interesting because both the US SEC and the HK SFC have taken parallel enforcement action on both sides of the Pacific
Read the article White Collar Crime by Niall Coburn, published in the Queensland Law Society’s Proctor, April 2010…
Read the article Corporate Investigations by Niall Coburn, published in the Journal of Financial Crime, Vol 13, No. 3, 2006…
What is the reason behind the failure of so many mortgaged focused managed investment schemes (MIS)? Many Australian investors who have lost money are asking this very question. Can it be put down to the GFC swindling directors or just bad law that allows conflicts of interests and fails to protect investor interests? My view is that at the moment the whole corporate model is flawed, because a director who is on the board of the reporting entity is also permitted to be on the Board of the Management Schemes and make investments decisions. So if the wolf is bad who is the trustee?
Last financial year witnessed a number of managed investments schemes where redemptions of millions of investor dollars have been frozen or folded losing the majority of investor funds. No one has really tallied up the losses, but an educated guess would put the damage at many billions of dollars. Investors most affected have been retirees that may not have been informed or fully appraised about the extent of the risk involved or the risky investment models used by the directors of these schemes. Many of these investors have been let down by, directors and auditors and
It is clear that insurers are committed to reducing the fraud problem in the industry and have provided greater resources to combating all types of insurance fraud generally throughout the industry.
However, what this article will highlight is despite the progress made by the insurance industry fraud is increasing significantly and the attitudes of people towards insurance fraud has not changed. It appears to be socially acceptable to fraudulently claim from an insurer. This article will outline what is needed is emphasis on changing the publics’ attitude to and awareness of insurance fraud. What is required is an international strategic advertising campaign on insurance fraud similar to the campaigns on copyright awareness. The author believes that only with this emphasis of changing attitudes will see a reduction in insurance fraud. These media campaigns will have to be simultaneous and conducted internationally.
To regulate or not to regulate hedge funds has been a question that many international regulators have faced. The question now is to what extent regulation will be imposed, not when it will be imposed. More recently, the estimated US$1,6000bn (£800bn, €1,200bn)2 industry has faced much scrutiny concerning the rewards given to their senior managers, not to mention the added voices of financial regulators concerning the lack of regulation and the risk that hedge funds pose to the stability of the financial markets.3 Irrespective of their popularity and high returns regulators will struggle dealing with hedge funds, because clamping down on them is politically difficult as the industry is large and competitive. Notwithstanding this, because the industry is growing so quickly and without full transparency, regulators in the future will have to be more vigilant on their stance and cautious in the policy direction they take in attempting to regulate them.
- Definition of Insolvency
Section 588G of the Corporations Act 2001 (“Act“) relies on the definition of “insolvency” in section 95A of the Act. Section 95A defines “solvency” and “insolvency”. Subsection (1) provides that a “person is solvent if and only if, the person is able to pay all the persons debts as and when they become due and payable”. The provision then explains in subsection (2) that “a person who is not solvent is insolvent“. Insolvency is expressed as the inability of a company to pay its debts as and when they become due and payable. The explanatory paper states that “the proposed section 95A establishes a clear statement when a person is or is not insolvent“.
 The Financial Services Reform (Consequential Provisions) Act 2002 (“Consequential Act”) Item 1 of Sch 2 reinstates s95A to take account of a drafting error in the Financial Services Reform Act 2001 (“FSR Act”) that deleted the definition. You will note that Item 3 in the table in s2, Commencement, the definition is retrospectively reinstated immediately after the commencement of the FSR Act. In addition, Corporations Regulation 10.2.122 was prepared to cover the