Here is an updated list of those wealth management organisations fined and punished in other ways for a raft of offences, such as sanctions breaches and misuse of confidential data.

The “naughty corner” for miscreant banks and other wealth management institutions is getting crowded and also highlights why compliance is such a major spending and recruitment issue for firms these days. Charges of inter-bank rate fixing, lax anti-money laundering controls and questionable pricing policies have been leveled – and in some cases punished heavily.

Some of the failings that have been punished go back several years and as of the time of writing, firms have moved, or say they have done so, to clean up their act. Some firms making the headlines are aware of the work they must embark upon to improve their reputation. These firms must engage as openly as they can with clients (and for that matter, constructive critics such as this publication). Other banks have added to risk management teams in recent months, and no doubt will continue to do so.

By way of a guide to some of the problems that have hit these firms, here is a summary of the main institutions. Not all of the cases mentioned are complete and could be subject to further action. The summary here is in no way a comment by this publication as to the specific responsibility of the firms concerned.

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Goldman Sachs

US authorities fined the firm $50 million after an employee of the Wall Street firm agreed to steal confidential regulatory and government information to use in advising a client. The New York Department of Financial Services announced that Goldman Sachs will accept a “three-year voluntary abstention from accepting new consulting engagements that require the NYDFS to authorize disclosure of confidential information”.

Crédit Agricole

Crédit Agricole Corporate and Investment Bank, a corporate and investment bank owned by French group Crédit Agricole, agreed to pay a total of $787.3 million in criminal and civil penalties and enter a deferred prosecution agreement with US authorities for violating sanctions involving Sudan and other jurisdictions. The bank entered the agreement with the US Attorney’s Office of the District of Columbia for breaches of the International Emergency Economic Powers Act (IEEPA) and the Trading With the Enemy Act (TWEA). The bank also entered into settlement agreements with the Treasury Department’s Office of Foreign Assets Control (OFAC), the Board of Governors of the Federal Reserve System, the New York County District Attorney’s Office and the New York State Department of Financial Services (DFS).  

FCA fines

The UK's Financial Conduct Authority enforced fines of £1.23 billion ($1.92 billion) for market integrity breaches last year, according to new data from Kinetic Partners.

The regulator's recent enforcements relating to interbank rate manipulations include March's ban of Paul Robson from the UK financial services industry – the first public ban of a trader over LIBOR (the London Interbank Offered Rate) manipulations. Deutsche Bank was also ordered to fork out £227 million over its manipulation of LIBOR and EURIBOR inter-bank rates. This was a record FCA penalty for IBOR misconduct.

Foreign exchange manipulation fines, pleas and settlements

Six of the world’s biggest banks, Barclays, Citigroup, Royal Bank of Scotland, Bank of America, UBS and JP Morgan, were hit with heavy fines for breaches of rules around the $5.3 trillion (daily turnover) global forex market, putting the need for compliance once again in the spotlight. In total, the penalties on the banks stand at $5.6 billion.

Barclays was hit with a with a fine totaling £1.534 billion ($2.38 billion) from US and UK regulators for failing to control practices in its foreign exchange operations. UBS entered a resolution agreement with US authorities over their investigation into alleged rigging of the foreign exchange markets, avoiding criminal prosecution and obtaining conditional immunity from prosecution, it said yesterday. The bank admitted a charge of wire fraud and is to pay a $203 million fine in connection to LIBOR, the inter-bank interest rate. It has also agreed to pay a $342 million penalty relating to its forex business.

In the case of JP Morgan, it will plead guilty to violation of US anti-trust law and pay a fine of $550 million. The agreement was with the US Department of Justice and Federal Reserve. Royal Bank of Scotland also reached settlements with the Federal Reserve and DoJ over foreign exchange violations.

RBS agreed to enter a guilty plea pursuant to a plea agreement with the DoJ admitting that it knowingly, through one of its euro/US dollar currency traders, joined and participated in a conspiracy to eliminate competition in the purchase and sale of the euro/US dollar currency pair exchanged in the FX spot market in the US and elsewhere, in violation of the Sherman Antitrust Act. The charged conspiracy continued from as early as December 2007 to at least January 2013. RBS is charged with participating in the conspiracy from as early as December 2007 until at least April 2010. The plea agreement is subject to approval of the federal court in Connecticut that is presiding over the matter. RBS will pay penalties of $395 million to the DoJ and $274 million to the Federal Reserve to resolve the investigations. RBS remained in discussions with governmental and regulatory authorities in other jurisdictions in relation to conduct within its FX business. In addition, RBS and RBS Securities have reached an agreement to settle the consolidated antitrust class action brought on behalf of plaintiffs who entered into FX transactions with RBS or other defendant banks. The agreement is subject to execution of a final settlement agreement and approval of the federal court in New York that is presiding over the matter.

Citigroup announced it has entered into settlements with the US Department of Justice and the board of governors of the Federal Reserve System to resolve investigations into Citi’s foreign exchange business. The settlement with the DoJ includes a guilty plea by Citicorp, a subsidiary of Citigroup, to a violation of the Sherman Antitrust Act and fine of $925 million. The settlement with the Fed includes the entry of a cease and desist order and a civil money penalty of $342 million. Citi also announced that it has reached a separate agreement to settle related private US class action claims for a payment of $394 million, subject to court approval. Citi expects to maintain its licenses and does not expect a material impact on its operations or ability to serve its clients. The payments required by each of the settlements Citi announced today are covered by existing legal reserves and will not require a charge to earnings in the second quarter of 2015.

Bank of America was fined $205 million. BoA avoided a guilty plea over the actions of its traders in chat rooms. Five out of the six banks (excluding Bank of America) pleaded guilty to felony charges.

HSBC

HSBC’s Swiss-based private banking unit agreed to pay $12.5 million to settle charges with the Securities and Exchange Commission for failing to register before providing cross-border brokerage and investment advisory services to US clients. HSBC Private Bank amassed as many as 368 US client accounts and collected fees totaling approximately $5.7 million for cross-border advisory and brokerage services, which it began providing more than 10 years ago.

The UK’s financial regulator slapped fines totaling £1.115 billion ($1.7 billion) on five banks for lax controls on their G10 spot foreign exchange trading operations, while US and Swiss regulators have also punished banks, ending a probe into forex benchmark-rigging that is likely to put more pressure on firms to tighten compliance. The UK regulator imposed the fines on the following banks: Citibank NA £225,575,000; HSBC, £216,363,000; JP Morgan, £222,166,000; Royal Bank of Scotland, £217,000,000, and UBS £233,814,000.

Separately, the Bank of England fired its chief currency dealer, Martin Mallett, making the saga one of the most serious financial scandals to have hit the City in years. US and Swiss regulators also investigating the issue in the world’s $5.3 trillion-a-day forex market took action. FINMA, the Swiss regulator, disgorged SFr134 million ($138 million) from UBS; and, in the US, the Commodity Futures Trading Commission has imposed a total financial penalty of over $1.4 billion on the banks.

Barclays

The bank was fined a record £37.7 million ($61.8 million) by the UK Financial Conduct Authority for failing to properly protect clients’ custody assets, in a setback for the bank following the LIBOR scandal in 2012. The FCA said in a statement that the bank’s investment arm had failed to protect client assets worth £16.5 billion between November 2007 and January 2012. It is the highest fine ever imposed by the regulator or its predecessor, the Financial Services Authority, for client asset breaches.       

Bank of America

The bank agreed to pay a record fine of $16.65 billion over its failure to disclose the risk to customers of its mortgage-backed securities in the run up to the financial crisis in 2008. The US Justice Department said in a statement that as part of the settlement the bank had agreed to pay $9.65 billion in cash and $7 billion in relief to struggling homeowners. The cash portion consists of a $5.02 billion civil monetary penalty and $4.63 billion in compensatory remediation payments. The fine is the largest civil settlement with a single entity in US history and relates primarily to conduct that occurred at Countrywide and Merrill Lynch prior to BoA’s acquisition of them before the financial crisis.

Standard Chartered

The bank reached a $300 million settlement with US authorities over defective anti-money laundering controls. It also faces tighter controls on certain Hong Kong and United Arab Emirates clients. The UK-listed bank said it had reached a final settlement with the New York State Department of Financial Services regarding deficiencies in the anti-money laundering transaction surveillance system at its New York branch.

The bank had to suspend dollar clearing through its New York branch for high-risk retail business clients at its SCB Hong Kong subsidiary; exit high-risk client relationships within certain business lines at its branches in the United Arab Emirates, and refuse to accept new dollar-clearing clients or accounts across its operations without prior approval from the DFS.

PricewaterhouseCoopers

The firm was fined $25 million for improperly altering a report on anti-money laundering and sanctions compliance by Bank of Tokyo Mitsubishi. The New York State Department of Financial Services has also banned PwC from accepting consulting work at financial institutions regulated by the organization for two years.

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Lloyds Banking Group

The bank was fined $370 million by UK and US authorities for the manipulation of LIBOR and other benchmark failings. The fine includes $105 million by the Commodity Futures Trading Commission, approximately $178 million by the Financial Conduct Authority and $86 million from the US Justice Department. The manipulation of submissions covered by the settlements took place between May 2006 and 2009. Lloyds said in a statement that the individuals involved have either left the group, been suspended or are subject to disciplinary proceedings.

BNP Paribas

France's largest bank was fined $8.97 billion and temporarily lost the ability to handle dollar-denominated business in the US (with clients using a third-party bank) during 2015. The bank pleaded guilty to violations of US sanctions against Sudan, Cuba and Iran. The issue has raised concerns that US authorities are treating such cases as "shakedown" operations to fill government coffers (as argued by The Economist magazine this week). The fines have soured US-French relations.

Credit Suisse

The bank pleaded guilty to conspiracy to help US citizens evade taxes and agreed to pay a $2.815 billion settlement with US authorities, a move that the Swiss bank said will not affect its licences or business and operational capabilities.

Invesco Perpetual

The Financial Conduct Authority in the UK fined Invesco Perpetual £18.6 million ($31.3 million) for exposing investors to greater levels of risk than they had been led to expect. Between May 2008 and November 2012, Invesco Perpetual did not comply with investment limits designed to protect consumers by minimizing their exposure to risk. The FCA said that the rules designed to limit the risks to investors were broken on 33 occasions across 15 funds, resulting in losses of £5 million.

Standard Chartered

The Monetary Authority of Singapore took "appropriate supervisory actions" against the bank following findings that bank statements of some private banking clients had been stolen. The issue pertained to a report by Standard Chartered in December 2013 that around 560 of its private banking clients' February bank statements had been stolen at its third-party service provider, Fuji Xerox Singapore. Fuji Xerox had been the designated printer of the bank's statements for private banking customers. The police alerted Standard Chartered of the theft.

Standard Bank

The Financial Conduct Authority fined the UK subsidiary of South Africa's Standard Bank Group £7.6 million ($12.6 million) for failings relating to its anti-money laundering policies and procedures over corporate customers connected to politically exposed persons. The FCA said Standard Bank had failed to take reasonable care to ensure that all aspects of its anti-money laundering policies were applied appropriately and consistently to its corporate customers connected to PEPs between 15 December 2007 and 20 July 2011.

Royal Bank of Scotland

The US Department of the Treasury’s Office of Foreign Assets Control announced a $33 million agreement - as part of a combined $100 million settlement - with the Royal Bank of Scotland to settle the UK-listed firm’s potential liability for violations of US sanctions regulations. The settlement resolved OFAC’s investigation into apparent violations by RBS of US sanctions programs relating to Iran, Sudan, Burma and Cuba. From 2005 to 2009, RBS engaged in payment practices that interfered with the implementation of US economic sanctions by financial institutions in the UK.

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Lloyds Banking Group

The UK bank was fined a record £28 million ($45.8 million) by the Financial Conduct Authority for "serious failings" relating to its sales incentives, which resulted in a culture of mis-selling among advisors. The FCA said it was the largest ever fine imposed by it or its predecessor the Financial Services Authority for retail conduct failings.

SAC Capital

The $15 billion hedge fund run by Steve Cohen, one of the biggest names in the global hedge fund business, had to forfeit its investment advisory business and pay a total fine of $1.8 billion after pleading guilty to insider trading charges, the US Department of Justice announced. The settlement brings to an end a seven-year-long investigation by US prosecutors and fuels months of speculation as regards whether Cohen might turn the remainder of his business into a family office structure.

Rabobank

Rabobank, the Netherlands bank, agreed to pay more than $1 billion in criminal and civil penalties to settle investigations by US, UK and other regulatory authorities into its role in manipulating global benchmark interest rates. Rabobank’s chief executive, Piet Moerland, stepped down immediately after the announcement.

The settlement with Rabobank is the second largest agreement after the $1.5 billion penalty imposed on UBS related to the manipulation of benchmark rates, which help determine the borrowing costs for trillions of dollars of mortgages, business loans, credit cards and other financial products. As part of the settlement, Rabobank will avoid criminal charges as long as it continues to cooperate with investigators. The firm will pay a $325 million criminal penalty to the US Justice Department and $475 million to the Commodity Futures Trading Commission, as well as $170 million to the UK’s Financial Conduct Authority and about $96 million to the Dutch authorities.

HSBC

A unit of the bank was ordered to pay $2.46 billion after a US court ruled that one of the bank’s subsidiary companies along with three of its senior executives had made false statements that inflated the company’s share price. The ruling was against credit card and mortgage lender Household International, acquired by London-based HSBC in March 2003. Household - now known as HSBC Finance Corp - is believed to have made misleading statements that inflated the company’s share price. When contacted by this publication, HSBC stated that the matter had been noted in its filing for some time and that this was the next legal step in “an 11-year case”.

JP Morgan

UK and US regulators fined JP Morgan a total of $920 million for “serious failings” relating to trades carried out by the firm’s chief investment office and disclosed last year.

The bank has agreed to settle actions brought by the US Securities and Exchange Commission, which imposed a financial penalty of $200 million and required the firm to admit wrongdoing; the Office of the Comptroller of the Currency, which imposed a financial penalty of $300 million, and the Federal Reserve, which imposed a financial penalty of $200 million. In addition, the Financial Conduct Authority fined the bank $220 million.

Several months earlier, the Financial Conduct Authority fined JP Morgan International Bank a total of £3.08 million (around $4.6 million) for systems and controls failings at its wealth management business. The failings persisted for two years and were not corrected until the FCA brought them to the firm’s attention in the course of its thematic review into wealth management firms and the suitability of their advice. The FCA identified a number of issues with JPMIB’s processes and an inability to demonstrate client suitability from its client files.

Among the issues identified by the FCA were: client files which were not kept up to date or did not retain important client suitability information, a computer-based record system that did not allow sufficient information to be retained, suitability reports that failed adequately to contain a statement of the client’s demands and needs, and the fact that communications to confirm client suitability profiles were not always sent to the client (as required by JPMIB’s own policy).

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Aberdeen Asset Management

The Financial Conduct Authority fined Aberdeen Asset Managers and Aberdeen Fund Management £7.1925 million ($11.2 million) for failing to protect client money.

The FCA said in a statement that the firm had failed to adequately protect client money placed in money market deposits with third party banks between September 2008 and August 2011.

Guaranty Trust Bank

The Financial Conduct Authority fined Guaranty Trust Bank £525,000 ($814,196) for failing to have sufficient anti-money laundering controls for high-risk customers between May 2008 and June 2010, at the height of the financial crisis. The regulator said the failings are “particularly serious” because they affected customers based in countries associated with a higher risk of money laundering, bribery or corruption, including accounts held by politically exposed persons.

GT Bank, a subsidiary of Nigerian Guaranty Trust Bank, opened an office in London in May 2008 offering retail and wholesale banking products and services to private, corporate and institutional clients. Its controls were reviewed in 2010 when the FCA’s predecessor, the Financial Services Authority, conducted a review into banks’ management of money-laundering risks.

Sesame Bankhall

The UK’s Financial Conduct Authority fined Sesame Bankhall £6.0312 million ($9.28 million) for two sets of failings: failing to ensure that investment advice given to its customers was suitable, and failings in the systems and controls that governed the oversight of its appointed representatives. The penalty is made up of a £245,000 fine for Sesame’s advice failings in relation to key data life settlement products, and a £5.7862 million fine for systems and controls weaknesses across its investment advice business. All of the failings relate to Sesame’s oversight of its appointed representatives, which are individuals or firms that draw their authorization from a principal - in this case, Sesame - with the principal ultimately accountable to the regulator for poor practice.

UBS

The Zurich-headquartered bank agreed to pay around SFr1.4 billion (around $1.53 billion) in fines and related payments to the US, Swiss and UK authorities to settle investigations that Switzerland’s largest bank manipulated interbank interest rates. The UK's Financial Services Authority said that UBS's offenses were widespread and "do not make for pretty reading". The FSA said it had found at least 2,000 requests for inappropriate interest rate submissions, as well as a number of emails and other communications about the issue. As part of the proposed agreement with the US Department of Justice, UBS Securities Japan Co has agreed to enter a plea to one count of wire fraud relating to the manipulation of certain benchmark interest rates, including Yen LIBOR. Statements from other regulators were due at the time of this update going to press.

In a separate case announced on 11 August 2013, the bank agreed to pay SFr110.5 million ($119.9 million) to settle complaints of investors who had sued the bank in a mis-selling case of Lehman Brothers structured products. Lehman Brothers, a prominent producer of structured products, went bankrupt in September 2008. The face value of these products collapsed. "UBS is pleased to have resolved this legacy litigation matter arising out of the 2008 financial crisis. UBS agreed to the settlement to avoid the cost and uncertainty of continued litigation. The full cost of the settlement is covered by litigation provisions established by UBS in 2012 and in prior periods," UBS said.

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Societe Generale

Japan’s Financial Services Agency in October ordered the suspension of Societe Generale's Japanese private banking business, after discovering “serious violations of laws and regulations”, during an inspection.

The FSA took administrative action against the French lender, after “serious problems that may impede sound and appropriate business operations were recognized, regarding the governance system, the compliance system, and the customer protection management system”.

SocGen had to suspend most of its private banking division, which meant not accepting new money and soliciting for new money, between 23 October 2012 to 22 November 2012. SocGen had also to suspend most of its trust business in the corporate division between 23 October 2012 to 22 January 2013, which the bank said is a non-core asset.

The French banking giant has also been reprimanded by Hong Kong's Securities and Futures Commission for lack of internal controls of its wealth management activities in its Hong Kong branch, leading it to reimburse customers more than $11 million (amounts are in US dollars unless otherwise stated). The SFC raised concerns that, in over 3,000 transactions undertaken between April 2003 and January 2006, customers of the bank's Hong Kong-based wealth management activities paid or received a different price for over-the-counter products, from the actual price transacted for them by SocGen, with the difference, or margin, being retained by the bank as a fee.

Barclays

UK-listed Barclays has incurred penalties from US and UK authorities totalling £290 million (around $455 million) for misconduct relating to the inter-bank interest rate market. Chief executive Bob Diamond, a high-profile character renowned for his large bonuses and hard-charging style in running the bank, resigned. Lord (Adair) Turner, chairman of the Financial Services Authority, the UK regulator, branded the LIBOR-rigging as a huge blow to London’s reputation as a financial capital. The FSA is probing other banks; a letter sent to the New York Federal Reserve, and recently published, mentioned Lloyds Banking Group as a firm that is possibly implicated. The US Justice Department is carrying out a criminal investigation into the rate-rigging affair. Lloyds has declined to comment on the claims that it was involved.

HSBC

HSBC agreed to make a total payment of $1.92 billion to settle a US criminal investigation over breaches of anti-money laundering and sanctions laws, said to be the biggest penalty ever paid by a bank for such transgressions.

The UK/Hong Kong-listed HSBC created dramatic headlines earlier in the year when its global compliance boss, David Bagley, resigned in front of a US Senate Committee that was grilling HSBC executives and other persons about a report claiming widespread shortcomings in how HSBC operated anti-money laundering controls. It was said that money laundering failings facilitated monies for drug gangs, rogue states such as Iran, and terrorists.

Coutts

The UK-based private bank was fined £8.75 million (around $13.8 million) by the FSA, the sixth-largest fine ever handed out by the regulator, for failing to take reasonable care to establish and maintain effective anti-money laundering systems and controls relating to high-risk customers, including “politically exposed persons”.

Merrill Lynch

The Bank of America-owned firm was fined $2.8 million for supervisory failures that led to it overcharging clients $32 million in unwarranted fees. The US Financial Industry Regulatory Authority also imposed the fine on the US securities firm for failing to provide certain required trade notices. Merrill Lynch repaid the nearly 100,000 affected clients with interest.

UBS

The Irish Central Bank fined UBS's international life insurance division in relation to various breaches of a new act introduced to protect the financial system from money laundering and terrorist financing. The Central Bank of Ireland and UBS agreed on 19 June that the latter will pay a financial penalty of €65,000 (around $81,700) for failing to comply with specific requirements of the Criminal Justice Act 2010.

The life insurer, part of the Swiss wealth management and banking group, was not accused of terrorist financing or money laundering as such. Among the breaches were failing to instruct staff and directors about the new directives promptly after the Act had come into force in July 2010. The firm had also failed to adopt adequate written policies and procedures in relation to the identification and reporting of suspicious transactions, the central bank said in a statement. The central bank's anti-money laundering and counter terrorist financing supervisory unit identified these breaches during an inspection of the firm carried out in December 2010.

Standard Chartered

Standard Chartered agreed with authorities in New York to pay a civil penalty of $340 million to settle charges over transactions linked to Iran. "The New York State Department of Financial Services and Standard Chartered Bank have reached an agreement to settle the matters raised in the DFS Order dated 6 August 2012. The parties have agreed that the conduct at issue involved transactions of at least $250 billion,” according to a statement issued by Benjamin Lawsky, New York Superintendent of Financial Services.

In December 2012, the bank agreed a $327 million settlement with US authorities for rules violations relating to a period between 2001 and 2007.

“The settlements are the product of an extensive internal investigation that led the bank voluntarily to report its findings concerning past sanctions compliance to these US authorities, and nearly three years of intensive cooperation with regulators and prosecutors,” it said. “Under the terms of the OFAC settlement agreement, the deferred prosecution agreements with the Department of Justice and the District Attorney’s Office, and the cease and desist order and order of assessment of a civil money penalty with the Federal Reserve, no further action will be taken against Standard Chartered by these authorities if it meets the conditions set out in the agreements,” it said.

Wells Fargo

The Securities and Exchange Commission charged the firm's brokerage unit and a former vice president for selling products tied to mortgage-backed securities without fully understanding their complexity or disclosing the risks to investors. Wells Fargo agreed to pay $6.5 million to settle after the SEC found it relied excessively on rating agencies when selling products. The money will be placed into a fund for the benefit of harmed investors. The products were sold by Minneapolis-based Wells Fargo Brokerage Services (now Wells Fargo Securities), between January 2007 and August 2007.

BlackRock

The Financial Services Authority fined BlackRock Investment Management (UK) £9.5 million ($15.3 million) for failing to protect client money adequately.

Nikolai Battoo

The US Securities and Exchange Commission froze the US-based assets of an asset manager and two of his companies for fraudulently proclaiming to investors a track record of “exceptional risk-adjusted returns”, when in fact “particularly heavy losses” were incurred in 2008. According to the SEC, Nikolai Battoo claimed to manage $1.5 billion on behalf of investors globally, $100 million of which was on behalf of US-based investors. The losses he suffered in 2008 were due to his investments in the Bernard Madoff Ponzi scheme - in which several Battoo-managed hedge funds were heavily invested - and a failed derivative investment.