Shearman & Sterling LLP | FinReg | UK Prudential Regulator Fines Senior Managers For Failing to be Open and Cooperative
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  • UK Prudential Regulator Fines Senior Managers For Failing to be Open and Cooperative
    11/07/2018
    The Prudential Regulation Authority has announced that it has imposed financial penalties on two senior managers for failing to be open and cooperative about an enforcement action into the U.K. subsidiary of a Japanese bank by the New York Department of Financial Services in 2014. The PRA's enforcement action follows the financial penalties that it imposed in 2017 on this entity and an affiliate for breaching Fundamental Rules 6 and 7 of the PRA Rulebook in that the firms had (i) failed to communicate relevant information about the settlement with the DFS; and (ii) failed to inform the PRA of the potential implications of the DFS matter for certain senior managers.

    The latest fines have been imposed on the former Chair and a former Non-Executive Director for failing to inform the PRA that a senior manager might be restricted from conducting U.S. banking activities as a result of the action by the DFS. The PRA only learnt about the issue after publication of the DFS consent order. This meant that the PRA could not assess the implications or supervise any contingency planning.

    The PRA's announcement notes that under the Senior Managers Regime, the current Senior Manager Conduct Rule 4 requires senior managers to disclose appropriately any information of which the PRA or Financial Conduct Authority would reasonably expect notice.

    The U.S. DFS treats its potential enforcement actions as confidential supervisory information. A firm or individual that wishes to share that information, including with another regulator, must first obtain the permission of the DFS. The DFS will often require a confidentiality agreement from the home country regulator before it allows the disclosure. The result is that firms and individuals can become subject to conflicting requirements.

    View the PRA's announcement and the final notices.

    View the DFS consent order.

    View details of the PRA's action against the firm.

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