FSA fines Nomura £1.75m
Share
The FSA has fined Japanese bank Nomura £1.75m for widespread systems and controls failings around book marking within its international equity derivatives business.
The regulator says the Nomura systems and controls around marking the IED books fell “far short” of those expected for a business trading complex and high risk financial products.
It says Nomura failed to conduct its business with due skill, care and diligence and failed to take reasonable care to organise and control its affairs responsibly.
The FSA report says the failings came to light following the discovery of mis-marking of volatility levels in June 2008 in Nomura’s Hong Kong Single Stock book, which is a client facing book within the IED business. The mis-marking incident resulted in a negative valuation adjustment of £10.8m, which resulted in correlation readjustments across the other books, resulting in a further negative adjustment of £5.5m.
The FSA says the failings of Nomura were particularly serious because they were fundamental problems persisted over a prolonged period of time, until they were identified by the bank.
FSA director of enforcement and financial crime Margaret Cole says: “Financial instruments must be valued correctly by traders and a firm’s systems and controls must be able to minimise the risk of traders mis-marking their positions. When a firm’s systems and controls fall short of required standards, we will not hesitate to take action.”
Nomura has commissioned both internal and external reports on its systems and controls in the IED area and has taken extensive remedial action.
If you enjoyed this article, sign up here to receive daily email updates from Money Marketing and Follow @_moneymarketing
Readers' comments (9)
Julian Stevens | 24 Nov 2009 11:28 am
Good heavens ~ enforcement action from the FSA against................a BANK!! Mind you, it's only a foreign bank, but who knows what this may presage?
Now what did the FSA do about the UK bank that mass missold that Aviva fund earlier this year, resulting in huge damage to the life savings of thousands of elderly and patently risk averse customers? Nothing that I ever saw any press about. The bank even had the gall to reject complaints left right and centre, seemingly as a matter of standard policy, for which any IFA practice large or small would have been enthusiastically saturation bombed by the FSA.
We live in hope if not expectation of a just and level regulatory playing field. Don't hold your breath.
Unsuitable or offensive? Report this comment
Incompetent Regulators Awards Team | 24 Nov 2009 11:33 am
I think the FSA staff should get fined for their failures. £100,000 for each 2500 staff = £250 million. Just enough to over their debts. Well see if they make any more mistakes going forward.
Unsuitable or offensive? Report this comment
Ray | 24 Nov 2009 11:36 am
Julian, the FSA may take action against the Bank you refer to but you are unlikely to see any outcome quicker than around 18 months - this case has taken over 16 months and they probably didn't put up any resistance or challenge any of the findings.
Unsuitable or offensive? Report this comment
Anonymous | 24 Nov 2009 11:39 am
FSA bit short for their Xmas bonuses are they?
Unsuitable or offensive? Report this comment
Julian Stevens | 24 Nov 2009 11:47 am
I note your forecast of another 18 months before anything meaningful happens, Ray, assuming it ever does. But that'll be almost three years of loss and anxiety for mostly elderly and vulnerable people who've been shamelessly targeted before anything actually gets done. How can this constitute anything remotely approaching effective regulation? Surely, the FSA should have been able to conclude its investigations after 16 months and have issued a blanket directive to the bank in question to pay full and immediate restitution to all victims with 20% compensation on top AND a hefty fine?
I just don't understand how the wheels of justice can move so agonisingly slowly. It hardly inspires confidence in our regulatory system, does it?
Unsuitable or offensive? Report this comment
Josh | 24 Nov 2009 11:50 am
may we know the criteria the used to arrived at the 1.75million figure?
Unsuitable or offensive? Report this comment
Julian Stevens | 24 Nov 2009 12:11 pm
Since when did the FSA ever care about not having enough money in the kitty to pay its Christmas bonuses? Hadn't you heard? They've got £100m of borrowing facilities in place with a couple of the banks they've failed to regulate properly (or is it twice that?), so there's plenty of spare to be drawn on.
Now, what was all this the FSA's been saying about capital adequacy requirements for everyone else.......?
Unsuitable or offensive? Report this comment
Malcolm | 24 Nov 2009 12:59 pm
Does anyone out there have anything good to say about the FSA?
Unsuitable or offensive? Report this comment
Neil | 24 Nov 2009 1:43 pm
No Malcolm.
Unsuitable or offensive? Report this comment