Today’s very short post looks at the news that Goldman Sachs, having recently bought $2.8 billion’s worth of bonds issued by the Venezuelan state-owned oil company Petróleos de Venezuela (PDVSA), is being heavily criticised for doing so by opposition leaders in the country. For this short post, the actual details of this sale will be scrutinised because it reveals an understanding of the philosophy of big financial institutions like Goldman Sachs, as if that were needed at this point, which is important to consistently repeat – the acceptance of such a philosophy can never be allowed to become the ‘norm’. The obvious criticism stemming from the opposition in the economically-ravaged country that is swaying from one crisis to the next , is that the bond sale represents the Bank as ‘ aiding and abetting the country’s dictatorial regime ’ and that, ultimately, ‘ Goldman Sachs decided to make a quick buck off the suffering of the Venezuelan people ’. Now, before we continue, it ...

Today’s short post reacts to the news that the majority of shareholders pursuing legal action against the former CEO of RBS, Fred Goodwin, as well as the Bank itself for representing a false picture of their health before a £12 billion cash call in 2008, have apparently decided to accept a settlement offer from RBS at 82p per share, 10p less than they had hoped. For this post, the details of why this is happening are of importance, as is the fact that the country will presumably miss out on a chance to witness a group of individuals who partook in the pilfering of society be examined in a court of Law. We have only recently discussed this case here in Financial Regulation Matters , so there is little need to go into any great detail on the case itself. Essentially, in 2008 RBS had painted a picture of its health before a £12 billion cash-call that was simply not true, with those who had met the call losing serious amounts of money shortly afterwards. A group of 9,000 investors ...

Today’s post represents somewhat of an update on two posts that have come before here in Financial Regulation Matters , concerning the relationship between big business and the student accommodation sector , and then the continued increase that followed. Rather than go over these particular issues again, this post will instead analyse the conclusions emanating from the recent ‘ Student Housing Conference ’ held on Wednesday, and then expand this analysis to look at some of the issues that may result because of these developments, particularly in relation to the notion of equality and the impact upon studies. The recent Student Housing Conference, held in London last Wednesday, saw some of the world’s richest individuals and institutional investors flock to Covent Garden, so much so that the annual gathering ‘had grown from 200 people to more than 500’ and ‘ potential buyers were forced to stand during presentations ’. In addition to this, the new trend sees foreign investment f...

In the final article preview this week, this short post will discuss a topic that has been discussed before here in Financial Regulation Matters , and that is the issue of the ever-increasing ‘bubble’ that is motor finance. In previewing the article ‘The Warning-Light of Automobile Securitisation: Credit Rating Agencies and Their Role in a post-2016 World’, to be published in the Business Law Review (but is available here in its pre-published format), this short post will discuss the issues raised in the article, and will conclude by assessing the dangers that are becoming increasingly apparent in this specific sector. The article begins by contextualising the issue at hand – namely, the elements of the securitisation process that sees the rating agencies play a fundamental part. To begin with, the major difference between the securitisation process that we saw with the Residential Mortgage-Backed Securities (RMBS) that was central to the Financial Crisis and the current ‘bub...

Today’s post previews the third article this week, one which analyses the recently proposed ‘Financial CHOICE Act’ in the U.S., particularly by way of assessing its proposed regulation for the credit rating industry. The article, entitled ‘The Financial CHOICE Bill and the Regulation of Credit Rating Agencies: Opening the Gates for the Gatekeeper’, is to be published in Financial Regulation International and is available here in its pre-published form. For this post, the aim will be to preview the article and provide some critical analysis of the bill, all from within the parameters of understanding that the Bill represents, quite clearly, the ethos of what this author calls ‘regulatory amnesia’. The ‘ Financial CHOICE Act ’, with ‘CHOICE’ being an acronym of ‘Create Hope and Opportunity for Investors, Consumers, and Entrepreneurs’, is a remarkable proposal that is currently at the Bill stage in the development of American legislation, with it recently moving past the House Fi...

Today’s post previews a forthcoming article by this author, to be published in the International Business Law Journal , entitled ‘Credit Rating Agencies and Environmental, Social and Governance Considerations: A Long Road Ahead’ (the pre-published version can be found here ). In this post, the topics that the article focuses upon, as well as its conclusions, will be reviewed against a discussion regarding a particular movement that is currently gaining prominence within the world of big business. Briefly, the article is concerned with analysing the recent move by the leading credit rating agencies, in which they have pledged their support and apparent adherence to following the ‘ Principles for Responsible Investment ’ (PRI) initiative. Before assessing why the agencies have chosen on this particular course of action, the article introduces the PRI and its aims, with the intention of assessing whether the rating agencies, as we know them, seem to fit within similar ideals. The P...

Today’s extended post will be the first of a number of article previews this week concerning the credit rating industry. Throughout the week we will look at a number of issues, ranging from current regulatory proposals in the U.S. concerning the industry, to the role of the agencies in the emerging motor-finance bubble. In today’s post, the focus will be upon a work in progress that aims to chart the history of the ratings industry, but does so with a ‘cultural’ lens; the thesis of the piece is that the current agencies act in a manner which they have always acted – ruthlessly in their own self-interest – and that we must have that at the forefront of our minds if we are to regulate the industry for the protection of the public. The article, which can be found here in its current form, primarily seeks to recount the major instances within the industry’s history and analyse them to see if a pattern emerges. Before the article analyses the first ‘phase’ of the industry as we kn...

Today’s short post looks at the news that former RBS Chief Executive Fred Goodwin ( formerly Sir Fred Goodwin ) will, unless there is a last-minute settlement, be forced into the public limelight nearly 10 years after exiting stage-right under a cloud of controversy. On the same day as the General Election in the U.K., Fred Goodwin is scheduled to appear before the High Court in London to answer for his actions during the Financial Crisis within a civil action brought by thousands of RBS shareholders who, citing three former board members as well as Goodwin, allege that they were misled regarding the health of the bank when they took part in a £12 billion cash call in April 2008 . For this post the focus will be upon the case itself, but also the potential ramifications for RBS if their former Chief Executive’s business is aired in such a public and potentially hostile arena – as one commentator noted: Goodwin is being ‘ cross-examined by a Barrister, not a politician, and a judge w...

On the 2 nd of April here in Financial Regulation Matters , this author discussed the wave of ‘Deferred Prosecution Agreements’ being utilised by the Serious Fraud Office (SFO) – including the £497 million fine given to Rolls Royce and the £129 million fine given to Tesco – and concluded that the SFO represents, possibly, the most effective financial regulator in the U.K. because of its endeavour to punish, albeit based upon the realistic understanding that the financial elite are too protected in their positions to pursue with criminal convictions. Today, in the Conservative Party’s manifesto, the party pledged that they ‘ will strengthen Britain’s response to white collar crime by incorporating the Serious Fraud Office into the National Crime Agency, improving intelligence sharing and bolstering the investigation of serious fraud, money laundering and financial crime ’; so, for this post, the focus will be on whether this move to merge the two agencies is justified, or whether i...

Today’s short post acts as an update to the March post in Financial Regulation Matters that discussed the bank’s fraudulent creation of up to 2 million fake bank accounts, for which it was fined $185 million. However, news over the past few days has revealed that, in fact, up to 3.5 million unauthorised customer accounts may have been opened instead. This post will therefore assess these claims and will then go on to look at what this ever-developing scandal is doing to Wells Fargo’s reputation – ultimately, the claim by major investor Warren Buffett, that the scandal is not materially damaging , may have already started to be proved wrong by developing events. As this issue has already been discussed in Financial Regulation Matters , there is little need to go over the scandal in any great detail again (a quick review of the scandal can be found here also). However, for us, the news that the 2 million figure for unauthorised bank accounts is likely to be increased upon inves...

Today’s short post looks at an issue which was covered in the very first few posts here in Financial Regulation Matters , which was the HBOS fraud scandal that saw a number of executives imprisoned for their crimes against small-medium enterprises (SMEs). Furthermore, we have also discussed in Financial Regulation Matters the development of the compensation fund that Lloyds has set up to compensate the victims of these crimes, and in this post the focus will be on recent developments with this story. As we know, Lloyds has commissioned Professor Russel Griggs to lead the compensation review regarding those affected by the £245 million fraud committed over a number of years. However, the initial noises emanating from the Bank was that it had set aside just £100 million for those affected, which led one victim to declare that ‘ the number doesn’t begin to cover it when you think of the capital that’s been stolen and all the consequential losses victims have suffered ’. Howeve...

Today’s post looks at the recent news that the value of finance deals for the purchasing of cars in the U.K. set a new monthly record in March, concluding at an increased rate of 13% over March 2016, totalling over £3.6 billion in March 2017 alone. We have discussed the issue of the automobile (car) finance bubble growing before here in Financial Regulation Matters , but the nature of the consistent growth means it is worth assessing the situation again because, ultimately, what looked like a relatively small ‘bubble’ is increasingly appearing to resemble much larger bubbles that have burst before, with catastrophic effects. Whilst the bursting of the car finance bubble may not grind the economy to a screeching halt, it will have a detrimental effect upon a global economy that is still recovering from the onslaught of 2007/08. So, in light of this, this post will assess some of the important aspects that are continuing to be prevalent, whilst also assessing the potential for the ...

In today’s post, the focus will be on something more existential than is usually the case here in Financial Regulation Matters . In what is, perhaps, an indulgence, today’s post will look at the recent comments made by legendary investor Warren Buffett regarding the failed takeover attempt of Unilever by Kraft-Heinz and its partner 3G. Buffet spoke in relation to the criticism that is being directed towards the practices of 3G – particularly regarding its ‘predatory’ behaviour and its penchant for cutting costs by any means necessary, as was previously discussed in Financial Regulation Matters – to which he responded that 3G was only following a ‘ standard capitalist ’ approach. In light of this, we will take a closer look at the story, but then expand the discussion to a call for the need to consider systemic issues, like Buffett does, rather than have our vision clouded by micro-issues. There is little need to review the whole process of Kraft-Heinz’s failed takeover attemp...