Regulator fines Commerzbank £595,000 over reporting lapses
Wednesday 28 April 2010
The Financial Services Authority has slapped Commerzbank with a £595,000 fine, making it the fifth City firm to be censured in eight months for failing to accurately report trading data.
The regulator fined the London branch of the German financial services giant after it sent the regulator inaccurate trading reports or failed to submit at all for two years.
Commerzbank failed to comply, despite requests from the FSA to check its data as well as "repeated reminders to firms of their obligations to provide accurate data and the importance of compliance".
While there was no suggestion of market abuse at Commerzbank, the FSA demands firms submit accurate data on trades by the close of business the day after they are executed. It uses this to police market manipulation and insider trading.
Alexander Justham, the FSA's director of markets, said: "Commerzbank's reporting failures could have a damaging impact on our ability to detect and investigate suspected market abuse. Firms and their management must ensure they submit quality transaction reporting data."
Commerzbank said in a statement it had "fully co-operated with the FSA and is deeply committed to meeting its regulatory obligations". It has launched a review of its transaction reporting operation and said it was committing "extensive resources to improve its processes and resolve the errors".
The regulator has been on the warpath to clean up the City over the past 18 months, increasing its pursuit of companies and individuals that have abused the market. Commerzbank's censure marks the fifth fine the FSA has issued since August 2009 – when Barclays' investment banking arm was handed a fine of £2.4m – to firms failing to provide accurate transaction reports.
The FSA discovered Barclays Capital's reporting failures as it reviewed a suspected incident of market abuse by an outside party. It found the group's systems and controls were inadequate, and the transactions reported were riddled with errors.
Mr Justham said at the time that the penalty was so much higher to reflect the "serious nature of Barclays breaches and is a warning to other firms that the FSA will not tolerate inadequate systems and controls". Earlier this month the City regulator fined Credit Suisse, the market-maker Getco Europe and the broker Instinet Europe a total of £4.2m on the same charges. Each firm was found to have committed "multiple breaches" to provide prompt, accurate data. "Each firm could have prevented the breaches by carrying out regular reviews of its data. Despite repeated reminders from the FSA during the course of 2007 and 2008, none of the firms did this," it said.
Other firms that felt FSA's heat
*The FSA won its market abuse case against Winterflood Securities last week, imposing a fine of £4m on AIM's largest market-maker. Wins was found to have played a pivotal role in illegal share ramping in Fundamental-E Investments.
*Alliance & Leicester was ordered to pay $7m in 2008 after the regulator found "serious failings" in its telephone sales of payment protection insurance over a three-year period.
*Last year, UBS was fined £8m for control failures that for nearly two years enabled staff to carry out unauthorised transactions with customers' money. The Swiss bank paid more than $42m in compensation for their losses.
*Citigroup received the largest ever fine handed to a financial services company – £13.9m – in 2005. It was censured after its so-called "Dr Evil" bond trades disrupted the bond markets and breached two FSA principles.
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