More On Legal & Compliancefrom The Advisor's Professional Library
- Regulatory Oversight of Investment Advisors Although the regulatory environment is in a state of flux, it is imperative that RIAs adhere to their compliance obligations. To ensure compliance, RIAs and IARs must fully understand what those obligations are.
- Preventing and Dealing with Client Complaints Although the SEC has not provided specific guidance on how client complaints should be handled, a firms policies and procedures should provide clear direction how to do so, as neglecting complaints can exacerbate a bad situation.
A report issued by Britain’s Parliamentary Treasury Select Committee had harsh words for just about everyone involved in the LIBOR-rigging scandal, chastising former Barclays CEO Bob Diamond on his testimony; the bank itself for a culture that allowed the rigging to go on; regulators for lack of decisive action; and the Bank of England (BoE) itself.
In its report, published Saturday, the committee provided plenty of criticism to go around. In a separate statement, Andrew Tyrie, who led the parliamentary hearings at which Diamond testified, criticized the latter for testimony that “fell well short” of the “candor and frankness” such committees expect. He also slammed Barclays itself for “disgraceful” actions and a culture “that had gone badly awry.”
He was no more merciful to the Financial Services Authority (FSA), for failing to “get away from box-ticking and endless data collection” in favor of action on real risk, and the BoE, which he said should have had a system for keeping a record of conversations such as that with Paul Tucker, during which Diamond claimed the BoE provided “approval” of its London interbank offered rate (LIBOR) manipulations.
Tyrie also said that the BoE should not have intervened in the manner it did in Diamond’s ouster; instead, he said a process must be put in place “to ensure accountability and transparency for the process of removing senior bank executives in whom the regulators have lost confidence.”
Diamond was assailed on a number of points in his testimony, one of which was his assertion that authorities at the FSA were pleased with Barclays. In their testimony, regulators had cited numerous occasions on which they had challenged the bank on its culture as early as 2010, and challenged its attitude regarding risk as well, even suggesting that Diamond should not be so close with executives in Barclays’ investment management division.
Pointing out these discrepancies in testimony between Diamond and members of the FSA, the report said, “It seems to us inconceivable that Mr. Diamond could have believed that the FSA was satisfied with the tone at the top of Barclays.”
There was also considerable discussion about the telephone call between Tucker and Diamond, during which Tucker denied in his testimony any suggestion that Barclays should lower its LIBOR rate so as not to appear to be in trouble by having to pay more to borrow than its peers. Diamond had said he did not regard Tucker as having given him an instruction for the bank to lower its LIBOR submissions.
As a result of these thoughts, it appears, Diamond took what at the time was an unusual step: writing a file note to John Varley, who was then Barclays chief executive, and to Jerry del Missier, at the time co-president of Barclays Capital; the latter allegedly took the file note as an instruction for the bank to lower its LIBOR submissions.
Tyree said in his statement of the exchange, “As the Report points out, it remains possible that the information released in the Barclays File Note, regarding a dialogue between Mr. Tucker and Diamond, could have been a smokescreen put up to distract our attention and that of outside commentators from the most serious issues underlying this scandal.”
Diamond issued his own statement Saturday, in which he said, “I am disappointed by, and strongly disagree with, several statements by the Treasury Select Committee. There is little dispute that Barclays was both aggressive in its investigation of this matter and engaged in its cooperation with the appropriate authorities.” In a Reuters report, he was quoted saying that he had answered Parliament’s questions "truthfully, candidly and based on information available to me. I categorically refute any suggestion to the contrary."