Andrew Procter, one of the Financial Services Authority's top investigators, has been lured away by Deutsche Bank, one of the companies he is responsible for regulating.
Mr Procter, the FSA's director of enforcement, will take up his new job as head of compliance for the UK and Western Europe at the German investment bank in April. His departure illustrates the regulator's difficulties in recruiting and retaining highly skilled staff and top managers, as many are wooed by more lucrative jobs at investment banks or other financial firms.
The FSA's managing director of risk, Carol Sergeant, left last year to join Lloyds TSB, where she became chief risk officer. Lloyds later faced almost £100m in fines and compensation payments over "unsuitable" precipice bond sales.
Mr Procter's appointment highlights the importance of compliance for investment banks after major financial scandals in recent years, including Enron, WorldCom and Parmalat.
Regulators in the US and Europe have forced banks to stamp out conflicts of interest in investment banking after scandals over biased equity research. In September, Hector Sants, the head of the FSA's wholesale and institutional markets division, told investment banks to improve disclosure of their debt and derivatives trading to help ensure the "fairness and efficiency" of markets.
At the FSA, Mr Procter has been active in cracking down on securities violations. Last April he imposed a £190,000 fine on Deutsche Bank itself after its Morgan Grenfell unit "disadvantaged" a client - a fund manager - by making its own trades in stocks before executing the trade for its client.
Mr Procter said yesterday: "I've had four hugely enjoyable and challenging years at the FSA. Hopefully, my contact with them in the future will be of a purely social nature."
Before joining the FSA in 2001, Mr Procter was a member of the Hong Kong Securities and Futures Commission and the executive director responsible for intermediaries and investment products. Before that, he held posts with the Australian Securities Commission, including national director of enforcement.
At Deutsche, Mr Procter will report to Henry Klehm, its global head of compliance, who said: "We are pleased to have Andrew as he brings a tremendously deep and diverse knowledge in the international banking regulatory field."
An FSA spokeswoman said David Mayhew, a barrister who advises the FSA, will be acting director of enforcement.Reuse content