Wall Street giant Goldman Sachs fined £20m by UK's FSA

Wall Street giant Goldman Sachs has been fined £20m ($31m) by the UK City regulator, the Financial Services Authority, the BBC has learned

The fine is for failing to tell the FSA it was under investigation for fraud by the US financial watchdog this summer.


In July, Goldman settled the fraud charge with the Securities and Exchange Commission by paying $550m (£356m).

The £20m is one of the heaviest fines ever imposed by the FSA, said the BBC's business editor Robert Peston.

Both the FSA and Goldman Sachs declined to comment on the fine.

Goldman agreed to pay the US fine to settle civil fraud charges of misleading investors.

The charges concerned the bank's marketing of complex mortgage investments, just as the US housing market faltered.

The FSA said Goldman also did not tell them that Fabrice Tourre, the trader who helped to create these mortgage derivatives, was under investigation.

This it said was particularly relevant as Mr Tourre moved from the US to London, and therefore came under the auspices of the UK regulator.

Goldman has admitted that it made a mistake, our correspondent added.

Osborne 'to give Bank of England top regulatory role'

Chancellor George Osborne is expected to announce later that the Bank of England will be given the key role in regulating the UK financial sector.

In his first Mansion House speech, he is tipped to return this power to the Bank at the expense of the Financial Services Authority (FSA).


Before the election, Mr Osborne had suggested he would abolish the FSA.

However he is expected to say that the FSA will continue to have the role of supervising individual banks.

The FSA has come in for criticism for not doing enough to prevent or limit the crisis in the financial markets.

Sourced from The BBC

FSA warns City banks over client funds

• Financial Services Authority threatens to step in to ensure client funds are kept separate


• Concern over handling of assets first surfaced after Lehman Brothers' collapse

City firms are being warned by the Financial Services Authority that they face fines and public reprimands unless they comply with its request to name the individuals responsible for ensuring clients' money is kept separate from overall funds.

A letter from Sally Dewar, managing director of risk at the FSA, warns that the regulator could go as far as to demand that a company appoints a "skilled person" – an expert from outside the firm – to conduct the necessary work to provide a report to the regulator.

She gives firms until 30 June to respond to a request first made in January, when the regulator found "significant weaknesses" in the ways that client funds were being handled by companies providing investment banking services.

Banking reform proposals outlined

Opposition parties are setting out details of how they would regulate banking, following the loss of billions of pounds in the credit crunch.

Lib Dem Treasury spokesman Vince Cable is expected to argue that large, failed UK banks are the "financial equivalent" of the Chernobyl nuclear disaster.

And taxpayer-owned Lloyds and Royal Bank of Scotland should be broken up.

Meanwhile, Shadow Chancellor George Osborne wants to give the Bank of England more regulation powers.

However, he also wants to curb the personal power of the governor of the Bank by vesting the responsibility for supervising financial institutions in a new financial policy committee. This would include independent appointees.

The Tories, in their 52-page "plan for sound banking", also propose a raft of measures to protect and empower consumers.

These would include transforming the rump of the current Financial Service Authority (FSA) into a consumer protection agency and also forcing banks to give the consumers more useful information on what they charge.

Treasury minister Lord Myners called the proposals "window dressing that ignore the failures that led to the global financial crisis".

"While George Osborne talks about who's in charge, we are focused on the lessons of the crisis, including greater scrutiny of the shadow banking sector and a crackdown on excessive City bonuses.

"The Tory proposals would abolish an independent, expert regulator, while diverting attention from banks that took excessive risks that led to this crisis."

'Not hostile'

Meanwhile, Mr Cable will use a speech later to argue major reform is needed to make banks a lesser threat to the UK economy.

He will tell the London Stock Exchange he believes there is a long-term role for state banking, and will argue the banks in which taxpayers have a stake should be broken up into smaller parts before being returned to private ownership.

Tory financial plans
Mr Cable will also call for highly-paid bankers to publish details of their pay and bonuses and will repeat his calls for the FSA to keep its role as banking regulator.

"Some aspects of the financial services industry are simply too big for the British economy to manage safely," he will say.

"The large, failed, British banks are the financial equivalent of Chernobyl. Like the former Soviet Union, the UK became over-reliant on dangerous financial reactors."

To prevent Britain from becoming the next Iceland, "radical safety measures" were needed, he will argue.

"My approach to the City is not one of hostility, or of obsequiousness. I recognise its importance.

"But it needs 'tough love', not the freedom to run amok."

Earlier this month, Chancellor Alistair Darling said banks would have to hold more capital and announced plans to strengthen regulation.

He intends to set up a new Council for Financial Stability, which would see the FSA, the Bank of England and the Treasury meeting regularly and reporting on the systemic risks to financial stability.

sourced from THE BBC