RBS has been the subject of so many posts here in Financial Regulation Matters it is hardly worth providing links, although most recently we were looking at updates on the notorious GRG division within the bank. Today, there was a ruling regarding the conduct of the bank and the Unit, which has caused RBS to celebrate. However, in this short post we will see that the case is so unique, that it really is not a predictor of how future cases will be heard (that is, if they are). We had looked at the case of Oliver Morley recently , a business man who had claimed that RBS owed him £100 million for the damage that was caused to his business portfolio once he entered into the GRG’s remit. The case was based around the concept of ‘economic duress’ and the processes that RBS initiated once Morley struggled to re-finance etc. In today’s case, heard by Mr Justice Kerr, the Judge ultimately ruled that the bank did not place Mr Morley under any economic duress and were not guilty of intimi

In August 2018, KPMG were fined £3m for acting as an expert witness for Ted Baker in a civil case whilst also providing the fashion company with auditing services. On both sides of the Atlantic, KPMG has received numerous financial penalties for its misdemeanours so it is, of course, no stranger to getting into trouble. However, news this week of financial problems within Ted Baker may cause KPMG further trouble, with this coming hot on the heels of its £5m fine for its performance regarding the auditing of the Bank of New York Mellon . This short post will review the recent developments at Ted Baker and ask whether it is to be considered that auditors will naturally transgress, and that financial penalties are simply to be considered ‘par for the course’. On Wednesday it was widely reported that Ted Baker had admitted to an accounting error – it has overstated the value of its stock by nearly £60m . Media reports confirm that, last month, the firm had hired Deloitte to invest

Today’s post will be concerned with Moody’s. We will look at a recent article in the Financial Times , and the surprising response to it from the President of Moody’s Investors Service, the rating arm of the Credit Rating Agency. What is surprising is that Michael West responded at all, because a. the rating agencies do not usually respond to such broad criticism, and b. there was really no need to. However, we shall see that there may well have been a need to, as recent geopolitical developments may prove to be a massive victory for the agency and it may be vital that the agency seeks to reassure the marketplace about its ability to be of use, and as impartial as possible.  The original article in the Financial Times , an opinion piece by Patrick Jenkins entitled ‘ Credit Ratings, like dodgy boilers, can still blow up the house ’, offers very little other than the usual criticism of the credit rating model of the modern era. For example, Jenkins says that ‘whenever there is an

We have covered the story of Boeing and the issues it has bene having since the two airplanes fell from the sky in 2018 and 2019. However, today there was news that there are now even more issues with the same plane that is supposed to being fixed for a new rollout, which begs the question of whether this scandal could really bring a company like Boeing down. Though it is almost unthinkable, there are many components to consider. In this post we shall examine why this case is different to most other scandals and why, potentially, it could be more impactful for Boeing than it thinks. To begin with, it must be said that although it is facing turbulent times, Boeing remains one of the world’s largest companies . It is certainly not facing its downfall any time soon, but its situation is certainly not optimal. We last discussed the situation when we looked at the incredible number of aeroplanes that it has grounded since the demise of the Ethiopian Airlines plane in 2019; so much s

Life as the fourth-largest Rating Agency has not gone as planned for Morningstar. Last year the firm acquired DBRS – as we discussed here – and were hoping to improve investors’ trust in the rating industry by bringing a new and honest approach to the field. However, as Cezary Podkul of the Wall Street Journal has recently reported, it appears that they are about to be fined for falling foul of one of the oldest conflicts of interests that plagues the rating industry. The article introduces the news that Morningstar will, in coming days, be fined ‘ several million dollars’ for ‘violating riles in its bond-rating business that prohibit analysts who hand out credit ratings from being involved in sales and marketing for their companies ’. There are a number of regulations that came in after the Financial Crisis – and, in truth, agencies pledged on a self-regulatory basis to prevent the same thing from happening even before the Crisis – to prevent this behaviour. The calls to erec

The title of this last of three posts today is a little misleading, because it would probably need a dedicated team to keep up-to-date on the case of Carlos Ghosn. In November 2018 we heard from Oluwarotimi Adeniyi-Akintola of Aston Law School how Carlos Ghosn had been accused of financial improprieties and the falsification of securities reports or, as The Independent put it, Nissan had found that he had engaged in the personal use of company money and had under-reported his income in violation of Japanese law . However, since then, the case has taken an almost soap-opera style turn and today, in front of a packed room of reporters in Lebanon, the former Chair of the Nissan Alliance put forward his case as to why he had circumvented the conditions of his House Arrest in Japan and fled to Lebanon . After being charged by Japanese authorities last year, Ghosn had posted a £6.8 million bail in April. Owing to his abilities and connections, the bail deal was structured so that he

We have examined Tesco and some of its organisational policies on a number of occasions here in Financial Regulation Matters . Most recently, we looked at how it was adopting a more regional approach to its business by acquiring companies like Booker, and moving away from its previous, more global ambitions. One element that clearly illustrates this once global ambition, and subsequent retreating from it, is the company’s Asian endeavour. Tesco Lotus , which saw the firm expand out into Thailand and Malaysia mainly, has proven to be successful for Tesco, relatively speaking – it has been suggested by experts that from the nearly 2000 stores it has in the region, Tesco Lotus accounts for more than 9% of the company’s global retail sales, with the division reporting nearly £2.6 billion in sales last year alone . However, as part of an operational turn-around, Tesco is looking to sell the division. Yet, according to a recent Financial Times article, that plan may not be as straigh

In the first of three short posts today, this particular post will continue analysis that we started here in Financial Regulation Matters in early 2018. We first previewed an article on Scope Ratings that I had written for the European Company Law journal in February 2018, and then followed that up with an update in May 2019 here . As the company was recently featured in the Financial Times , a small further update would be good to keep us abreast of the development of this European-based challenger to the Big Three’s hegemony. The last time we assessed Scope Ratings, all was positive. They had grown their workforce from around 50 to over 200 staff, and also had received the fantastic boon of a number of major insurance companies coming on board with the project. HDI and Signal Iduna had joined as investors, taking the investor pool to over 70. However, in the Financial Times article dated 2 nd January, and entitled ‘ Scope faces uphill struggle to crack credit rating mar