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canadian consultation with retail investors – results December 18, 2008

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Yesterday, Canada’s Joint Standing Committee on Retail Investor Issues reported the results of its public consultation on suitability. The Joint Standing Committee received 24 responses to the consultation despite contacting a number of organizations to try to encourage participation. The report doesn’t give any information about any characteristics of the respondents, although it does include the written responses (which give some slight indications of the people who made them). I really enjoyed being able to see more than just an official summary.

dealing with the financial crisis uk style December 11, 2008

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From the First Report of the House of Lords Merits of Statutory Instruments Committee for the 2009-10 Session we see that the UK is dealing with the financial crisis by increasing opportunities for people with spare time on their hands to gamble:

Draft Gambling Act 2005 (Gaming Machines in Bingo Premises) Order 2008
4. Following representations from the industry, the draft Order proposes to double the number of gaming machines allowed in Bingo Halls from four to eight. This is to help provide additional income to the many small clubs which are struggling in the current economic climate. The Government see this small focused increase in gaming as compatible with their overall objective of protecting the public, because they accept the industry’s case, supported by a number of MPs, that Bingo Halls also serve a community function. Adult gaming centres (arcades) have made a similar application which has not been granted.

And there’s more of that tendency to react to the crisis by reducing process:

Takeover Code (Concert Parties) Regulations 2008 (SI 2008/3073)
6. HM Treasury have laid these Regulations, which provide that certain persons are not considered to be “persons acting in concert” under Rule 9 of the Takeover Code simply by virtue of the Treasury’s shareholdings as a result of the exercise of powers under the Banking (Special Provisions) Act 2008 (in relation to Northern Rock plc and Bradford & Bingley plc), or participation in the recapitalisation scheme (in relation to The Royal Bank of Scotland Group plc, and the prospectively merged HBOS plc / Lloyds TSB plc). We sought further information from HMT to explain why they were unable to lay the Regulations before Parliament sooner than one hour before the Regulations were brought into force.

formalities matter – sometimes December 5, 2008

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W R Huff Asset Management, which has been acting as a vulture with respect to Adelphia, has run up against a standing problem. The Second Circuit held in W.R. Huff Asset v. Deloitte & Touche that an investment advisor with discretionary authority to make investment decisions for its clients, and a power of attorney to file suit on its clients’ behalf (and no ownership of or title to the claim) has no constitutional standing to bring a securities action in a representative capacity on behalf of its clients. Following Sprint v APCC the court said that it would have made a difference if the clients had assigned their claims to the firm, even if Huff were obligated to hand over any damages to the clients (i.e. an assignment in form rather than in substance). The decision in Sprint rested on a longstanding practice of courts to accept that assignees of claims for collection had standing. (more…)

lord lipsey at the treasury select committee December 4, 2008

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Browsing the UK parliament’s website I notice that the Treasury Select Committee is scheduled to meet on December 15 to hear oral evidence on the work of the FSA in 2007-8. Here’s the list of people who are to be speaking:

Lord Lipsey, Chairman, Financial Services Consumer Panel, Nick Prettejohn, Chairman, Financial Services Practitioner Panel, Simon Bolam, Chairman, Smaller Businesses Practitioner Panel, Which?; Lord Turner, Chairman, and Hector Sants, Chief Executive, Financial Services Authority

Could be interesting…

full speed ahead on eu depositor protection proposals December 3, 2008

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Despite some expressed reservations in other places, the Ecofin Council (only the French version seems to be available as yet) has announced:

Au cours des derniers mois, le Conseil a déterminé, en un temps très court, sa position sur quatre projets de directive clés concernant : la solvabilité des compagnies d’assurance (directive “Solvabilité II”), les exigences en capital des banques, le fonctionnement des OPCVM (organismes de placement collectif en valeurs mobilières), et les systèmes de garantie des dépôts bancaires. Ces directives ont fait l’objet d’un accord du Conseil lors de cette réunion de l’Ecofin, ce qui permettra à la présidence de poursuivre les négociations entamées avec le Parlement européen. Ces contacts, positifs, permettent d’espérer l’adoption des quatre directives en première lecture.

consumers and financial regulation: december 2008 December 2, 2008

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As of this morning, David Lipsey no longer chairs the UK’s Financial Services Consumer Panel. His tenure was short – he became Chair in June of this year, and seems to have had different views about the role of the panel from those of other members of the Panel and of the FSA. The FSA’s statement reads:

In addition to the traditional activities of the Consumer Panel, David has proposed a much wider remit, with a role across a wide lobbying agenda supported by greatly increased resources. The members of the Consumer Panel did not, however, share David’s belief that this changed and wider role was appropriate, nor did the FSA believe that the change from the existing role was required.

Lipsey’s resignation letter states:

Over my six months in office, I have sought to promote a significant change of role for the Panel to tackle consumer financial services issues in a broader sense. This has become more urgent in my view as a result of the blow to consumer confidence resulting from the financial crisis.
This approach has not won the support of the FSA or of the panel as a whole. Additionally, the increased resources required to sustain that altered role will not be made available. In those circumstances, the panel requires a change of leadership.

Only a few days before the announcement of his resignation, Lipsey made some critical comments at a FSA conference on its retail distribution review. This development raises some questions about whether it is really possible to have effective representation of consumer interests in a structure where the consumer representation is funded by a regulator which is committed to not frightening regulated firms too badly.