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announcements. Plainly midsummer was the moment not to merely cast some pebbles into the City’s pond but to lob in splashy rocks.

Taking the mantle from the Treasury, the Home Office kicked off with the introduction to Parliament of its Serious Crimes Bill, clause 41 of which is intended to incriminate professional advisors and intermediaries who provide assistance to an “organized crime gang”. Moving across Whitehall to the Ministry of Justice, Ken Clarke was revived and appointed to lead an impromptu review of enforcement of the Bribery Act. From the Attorney General’s Office came the news that active consideration was suddenly being given to the SFO Director’s long-ignored proposal that corporate criminal liability should be widened to include a new offence of failure to prevent fraud.

It’s clear that things in these markets are not going to continue as before but the question is whether changing anything will actually change anything significant. Will the going really get tougher for the few who exploit the many? Legislation and regulation of financial markets introduces complexity and just like tax legislation or codes this creates the opportunity for smart or adroit people to spot loopholes and to profit. Indeed experience especially from the US shows that sometimes it is well-intentioned new laws designed to protect customers that end up creating these opportunities.

If the allegations of malpractice concerning FX are credible, the Government will need to react by framing yet another new criminal offence; this

time in order to ban front-running. That will be a formidable task. Whilst all will agree that this is indefensible there will inevitably be intense lobbying around ensuring that pre-emptive risk- sharing or reinsurance is not caught. That well- informed and innovative activity is similarly not criminalized and above all that this definition, in order to avoid regulatory arbitrage, will be adopted internationally.

The prospects for real change are also not encouraging because recent events suggest that much of the problem may emanate from the regulators themselves. In LIBOR the forthcoming trials of the rate-setters will no doubt explore the acquiescence of the then deputy governor of the Bank of England to “low-balling”. Chummy exchanges between him and the then boss of Barclays makes for awkward reading. In FX, suspicion that the Bank condoned trader activities concerned with anticipating the WMR fix is deepened by the appointment of Lord Grabiner by the Bank to investigate what it knew and did. And in the next banking scandal yet to break, that concerned with High Frequency Trading, it is already apparent that some exchanges have been deriving substantial fees from allowing HFT companies privileged access to market information.

Finally, the Government’s pronouncements overlook that inconvenient detail;

public

spending. Criminal law concerned with financial fiddling is especially expensive to enforce and when the Mr Osborne came into power, the budgets of entities like the SFO were slashed. So what’s intriguing is what will happen after

Tel: +44 (0)20 7353 6000 Email: dc@corkerbinning.com Web: www.corkerbinning.com

the new offences reach the statue book after the political caravan has moved on.

The enterprise of making money out of money will always attract brilliant minds and when the potential to make vast profit appears available, the temptation to be ruthless and dishonest is constant. Responding to this challenge is an imperative for government and it must be hoped that its midsummer initiatives are a harbinger for effective regulation of the world of modern finance which yet permits free, fair and open markets to flourish.

About the Author

David Corker has a formidable reputation as a criminal and regulatory litigator. He is ranked as a key individual (Band 1) in the fields of Criminal Fraud and Crime and Cartel Defence by Chambers 2014. David specialises in acting for clients implicated in criminal or regulatory investigations, many of them international. He has many years’ experience of fraud, corruption cases and cartel investigations and also maintains a thriving general criminal practice.

Contact: David Corker Partner

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