Executives ‘should face criminal charges’ for staff actions

businessman handcuffsMore than a third of financial services professionals working in banks, asset management and hedge funds say executives should be held criminally liable for the actions of staff. Global professional services firm Kinetic Partners says it found support for criminal sanctions around the globe, most notably in the UK. Some 35% of global financial services professionals told Kinetic Partners that executives should be held criminally liable for the actions of staff, something that 27% of those classified as C-suite professionals also support. Since 2001, investigations of insider dealing are up 250%, market manipulation investigations are up 240%, intermediary misconduct cases are up by 280%, and corporate governance cases are up 530%. In recent years, responsibilities have increased with regulators’ fight against tax evasion, which includes the Foreign Account Tax Compliance Act, anti-money laundering and anti-bribery legislation, and similar rules. In the UK, 34% of respondents to the Kinetic survey say criminal liability for executives would be good for the industry, while 27% say it would have a longer-term negative impact. Twenty-seven per cent of respondents in the US are in favour of prosecutions, while 29% are against action; in Hong Kong, 35% are in favour and 36% against. Monique Melis, Kinetic Partners global head of regulatory consulting, says the threat of jail terms for those at the top of today’s financial services firms is increasingly real. “The fact that more than a quarter of C-suite executives actively welcome such moves should give some confidence that the industry recognises that a culture of compliance needs to start at the top,” Melis says. Kinetic Partners says even though its survey suggests support for criminal liability, there is skepticism over how much such rules can improve public confidence in the financial services industry. Some 65% of C-suite respondents, for example, say that recent financial services regulation would have little impact and 61% say existing regulation should be used more effectively. The survey is part of Kinetic Partners’ 2014 Global Regulatory Outlook report. ©2014 funds europe

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