Since the Commerzbank AG fine imposed by the FSA in April (see Regulatory Roundup #13), things had been quiet on the (failure to) transaction report front. However behind the scenes the FSA was obviously busy as the other week Société Général was fined £1.575m for transaction reporting failures.
This is the sixth firm to be fined in just over a year for such a breach. Like Commerzbank AG, Société Général is a incoming EEA branch so the FSA could not take any action in respect of possible systems and controls failures as this is the responsibility of the home state regulator (the AMF).
There were four distinct structures within the firm’s transaction reporting process but, unfortunately, with no complete oversight of the process. Although the firm had identified the need to review its transaction reporting process before October 2008, it wasn’t until May 2009 the FSA were advised by the firm that some reporting failures had been discovered.
Following a comprehensive review demanded by the FSA it was found that there were around 17.1m transaction reporting errors, which on further review increased to 18.8m.
Firms subject to transaction reporting may wish to take the opportunity to revisit their processes and, perhaps just as importantly, their oversight of the processes. Portfolio managers relying on the exemption in SUP 17.2.2G can refer to Market Watch 35 which was covered in Regulatory Roundup #17.