RBS failed to properly report 44.8 million transactions between November 2007 and February 2013; and failed altogether to report 804,000 transactions between November 2007 and February 2012. This represents 37% of relevant transactions carried out by RBS in this period, and breaches FCA rules on transaction reporting and its requirements for firms to have adequate management and controls.
Many of the problems with RBS’ own systems were compounded by the takeover of ABN Amro Bank N.V. in October 2007. The FCA considers that, given the considerable resources available to RBS, it should have been able to overcome these challenges and ensure adequate systems and controls were in place.
Tracey McDermott, the FCA’s director of enforcement and financial crime, said:
''Effective market surveillance depends on accurate and timely reporting of transactions. We have set out clear guidance on transaction reporting, backed up by extensive market monitoring, and we expect firms to get it right. As well as a financial penalty, firms can expect to incur the cost of resubmitting historically incorrect reports. We will continue to take appropriate action against any firm that fails to meet our requirements.''
The FCA’s overall objective is to ensure that markets function well. Accurate and complete transaction reporting by firms is an essential tool in delivering this objective. The FCA uses these reports in a number of ways – including identifying and investigating suspected market abuse, for example insider trading and market manipulation. Where the FCA sees any evidence of firms not acting properly it will not hesitate to act.
These failures are particularly concerning because the FCA already provides extensive guidance to firms on how to submit and check these reports, and has taken action against seven firms, including Barclays and Credit Suisse, for similar reporting errors. The size of the fine reflects the serious nature of the issue. RBS agreed to settle at an early stage of the investigation, and received a 30% reduction of their fine.
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