Regular readers of Financial Regulation Matters will know that, in 2015, Standard & Poor’s was fined a record $1.375 billion for its role in the Financial Crisis, and in early 2017 Moody’s was fined $864 million for the same offences. Although the two leading agencies of the rating agency oligopoly were never in any great danger because of these financial penalties, they did cause damage to their financial position. Recently, however, a massive development has taken place which may see their fortunes irrevocably increased. As part of China’s attempts to open up its marketplace to the world, long-held restrictions on foreign businesses within the Chinese jurisdiction have been relaxed so that now the agencies can set up independent entities within the country, as opposed to the previous regime whereby they could only hold minority stakes in joint ventures with Chinese companies . This has a massive potential for the agencies, who can now establish a massive foothold in such a ...

In today’s post, the focus will be on an industry that has been covered a lot here in Financial Regulation Matters . Recently, two auditors, in particular, having been making the headlines for all the wrong reasons, and as a result there have been calls for the industry to be ‘broken up’. However, how realistic is that call? There is a potential issue within society whereby calls are made that have no substance nor any understanding of the dynamics at play, so in this post we will look at the industry in closer detail to see just how realistic that large-scale call actually is. In the wake of the Enron Scandal and the collapse of Arthur Andersen, in addition to a massive reputational breakdown of the wider audit industry, the term ‘ too few to fail ’ was put forward as a suggestion for why the industry could simply carry on with their business once the news cycle has turned elsewhere. In the last year, these suggestions have been repeated , with there being an increased focus on...

Karl Marx would have celebrated his 200 th birthday this year, and a recent article in the Financial Times has caused this author to muse ‘What would Marx think of today’s society?’ In this very brief post, we look at this article and discuss just what Marx may have thought of how society has developed, and whether the common perceptions of Marx even do the great philosopher justice in today’s consciousness. This post is not meant to be a philosophical essay (far from it), nor is it meant to be some political statement. It is a simply a brief musing after reading a very interesting article here in the Financial Times . It is acknowledged that the FT is a subscription service, so whilst excerpts will not be repeated here, the general essence of the article will provide us with enough to look at the answer the question posed above (one cannot answer it, of course). The article is concerned with a project in Berlin set up to create a complete collection of Karl Marx and Friedr...

In the first of a few brief posts today, we shall be looking at a forthcoming article by this author on the credit rating agencies and their potential involvement with a push to increase corporate governance disclosure rates in the EU. The article was invited as part of a special edition for the Corporate Governance: The International Journal of Business in Society Journal, and will be published very shortly. The article is concerned with the European Commission’s (EC) efforts to increase the effectiveness of corporate governance disclosures, which is a system they have established which aims to construct a ‘comply or explain’ system of corporate governance reporting. The system was set up by the EC in 2014, and would take the form of what are called ‘ corporate governance statements ’. Since this system has been established, it has only witnessed limited success because, as was mentioned in a commissioned report for the EC, there has been a lack of ‘ informative disclosure ’ f...

To say that the post-Crisis era has been challenging for Deutsche Bank would be a massive understatement, and recently their woes have worsened considerably. In today’s post we will focus on the Bank and its troubles and look at its chances of surviving such a turbulent time in its history. Ranging from massive fines to shareholder revolts, the Bank is lurching from one crisis to the next, and over the weekend S&P slashed its rating on fears that the bank will be unable to recover from this era of crisis. Therefore, a question that may need to be posed is whether the bank is approaching the end of its crisis, or whether these continuous troubles are merely the red-flags in the demise of this massive bank that had grand ambitions. Developed in 1870 by the bank’s “true founder” Adelbert Delbrück , the bank’s original ‘statute’ ‘ laid great stress on foreign business ’. Very quickly the bank opened branches in Japan, China, the UK, and of course throughout Germany, although the...