- MF Global spoke of 'strong' finances
- EC: No corp gov powers for ESAs
- FSA appoints senior investment bank adviser
- GFS has now closed
- Czechs join UK on fiscal compact sidelines
- Davos stalemate on EU's IMF funds
- Tucker: Resolution regime 'top priority'
- Saudi Arabia increases central bank role
- FSB urges Canada for one securities regulator
- CFTC set for committee to scrutinise HFT
- Fitch downgrades Belgian banks
- What corruption really costs
- UK FSA pushes for Mifid II rethink on OTCs
- Shanghai boosts global financial status
- Canada aligns credit rating rules with EU
- Bowles blasts lack of women at ECB
- Sarkozy to introduce French FTT in August
- Barnier warns on further bonus reforms
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What corruption really costs
Monday 30 January 2012 – by Heidi Lawson 
When you mention the word “compliance” to almost anyone working in capital markets, be they bankers, lawyers or accountants, you almost immediately lose your audience. Impact on Price FCPA and Bribery Act investigations can have an immediate impact on share price. For example, on March 1, 2011, the Las Vegas Sands Corporation announced that the Securities and Exchange Commission and the DOJ were investigating its FCPA compliance. By the end of the trading day, its share price had dropped 6.3 per cent, which represented a shrink in market capitalisation of $1.67bn in a single day. Examples of this kind, showing a marked drop in share price and value in response to announcements of alleged corruption, are common. FCPA fines are steep and on the increase. In 2010, companies paid in penalties an average of $2.14 per U.S. dollar gained from FCPA violations. This is an 1,800 per cent increase from penalties of just $0.11 per dollar in 2007. In 2010, corporate fines and disgorgements for FCPA violations amounted to over $1.7bn, which exceeded all previous years. And, the six largest actions in 2010 accounted for $1.36bn of this total. There are also significant “downstream effects” that can far surpass the cost to companies of FCPA fines and drops in share price. These include securities class action lawsuits, disbarment from foreign contracts and restrictions on the ability to import or export goods and services.
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EDITOR’S CHOICE
- Diamond warns against ‘Balkanisation’
- ABI: UK insurers must keep EU links
- EU Parliament site hit by hacktivists
- George Soros: New year, same crisis
- FSB: Swiss regulator needs more teeth
- OCC: Deriv fears are an overreaction
- ‘Major wave’ of Solvency II drafts in May
- IMF paper urges Aus bank capital boost
- BoE: Limit bonuses to boost bank capital
- 2012 vision: Increased regulatory exposure looms
- Barnier offers hope to NYSE/Boerse
- Esma rushes short selling consultation
- Bowles re-elected as Econ chair
- Hoogervorst hints at accounting slowdown
- Asia in the year of the dragon
- Barnier: FTT will not be forced on UK
STRAW POLL
Will markets in 2012 have a tougher time than 2011?
