Greg Kilminster
Head of Product - Content
CUBE RegNews:
10th July
FSMA 2023 published
The UK’s Financial Services and Markets Act final legislation has been published. This significant piece of legislation further defines the UK’s post-Brexit status, highlighting more than 200 pieces of retained EU financial services legislation that will be revoked.It also provides the tools via which many of the Edinburgh reforms outlined at the end of 2022 will be implemented and delivered; and also introduces the new secondary statutory objectives for both the FCA and PRA, amongst other significant changes.
Click here to read the full RegInsight on CUBE’s RegPlatform
BoE and PRA publish annual reports
It continues to be reporting season for regulators and the Bank of England and Prudential Regulation Authority (PRA) have joined in publishing their latest annual reports as well as specific BoE reports on Asset Purchase, climate related financial disclosure and official market operations.
The main BoE report identifies a number of key risks that the bank assesses and manages: operational risks; financial risks; legal risks; conduct risks; and climate change risks but also notes several emerging risks including:
- Heightened risk of global geopolitical spill-overs from the Russia-Ukraine conflict
- Learnings from the widespread sales from liability-driven investment funds in September and October 2022, and banking failures in March 2023.
- The key financial and non-financial risks arising from the possible launch of a Central Bank Digital Currency as outlined in the Bank’s consultation paper in February 2023.
- Fake websites and and impersonations via the web and social media, which could have consequences for market behaviour and more generally public trust.
The Prudential Regulation Authority (PRA) has also published its annual report which reviews its achievements of the previous year including some significant regulatory achievements:
- Strengthened PRA’s supervisory approach by updating the categorisation of firms’ potential impact and reducing the number of categories.
- Implemented a multi-year program to enhance efficiency, effectiveness, and data-driven culture through investments in tools, technology, processes, and skills. This included a digital skills strategy and recruitment of data scientists.
- Improved supervisory insight tools to analyse and visualise firm data more effectively.
- Approved 1,231 senior management function applications and authorised five new insurers and six new banks in 2022/23.
- Enhanced processing time for senior management function applications, increasing the proportion of decisions made within the statutory service standard.
- Progressed the implementation of diversity and inclusion recommendations from the Bank’s independent Court review, focusing on ethnic and gender representation and initiatives to improve psychological safety.
Click here for the BoE report and here for the PRA report to read the full RegInsight on CUBE’s RegPlatform
SEC fine for pump and dump scheme
Former Chairman of Cool Holdings, Inc, Andrew DeFrancesco, has been hit with a fine of nearly $2m for his part in a fraudulent scheme involving false statements, omissions, and a pump-and-dump operation of Cool Holdings’ stock. The court had previously entered final judgments on consent against two other defendants, Nikola Faukovic and Catherine DeFrancesco, on June 16, 2023.
According to the Securities and Exchange Commission (SEC), DeFrancesco was the mastermind behind the scheme. The complaint alleges that DeFrancesco orchestrated the filing of false documents that concealed Cool Holdings’ precarious financial state and future prospects, including misstatements and omissions about a crucial business relationship. The complaint further claims that DeFrancesco secretly funded the publication of fraudulent promotional articles about Cool Holdings and, with Faukovic’s assistance, clandestinely sold hundreds of thousands of shares in the company that were held under nominee entities. DeFrancesco and his ex-wife, Catherine DeFrancesco, are accused of concealing his ownership of Cool Holdings’ shares by submitting false beneficial ownership reports to the SEC.
As part of the final judgment, DeFrancesco consented to a permanent injunction, prohibiting him from violating various securities laws. He was ordered to pay disgorgement and prejudgment interest totaling $1,276,070.49, along with a civil penalty of $1,737,224.52. Furthermore, DeFrancesco has been barred from serving as an officer or director of a public company.
Nikola Faukovic, another defendant in the case, agreed to a final judgment that permanently enjoins her from violating certain securities laws. She was ordered to pay disgorgement and prejudgment interest amounting to $14,350.32, as well as a civil penalty of $111,614. Catherine DeFrancesco consented to a final judgment that permanently enjoins her from violating specific securities laws and requires her to pay a civil penalty of $122,782.
This ruling marks a significant step in holding the individuals accountable for their alleged fraudulent activities, emphasising the importance of transparency and compliance within the financial markets.
Click here to read the full RegInsight on CUBE’s RegPlatform
CUBE RegNews:
A selected summary of key developments for regulated financial institutions
Access all of our daily regulatory content by using the login button below.
To find out more about how CUBE can help your business click here.