The FRC's Enquiries and Investigation of KPMG's 2007 and 2008 Audits Of
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The Corporate Governance Lessons from the Financial Crisis
ISSN 1995-2864 Financial Market Trends © OECD 2009 Pre-publication version for Vol. 2009/1 The Corporate Governance Lessons from the Financial Crisis Grant Kirkpatrick * This report analyses the impact of failures and weaknesses in corporate governance on the financial crisis, including risk management systems and executive salaries. It concludes that the financial crisis can be to an important extent attributed to failures and weaknesses in corporate governance arrangements which did not serve their purpose to safeguard against excessive risk taking in a number of financial services companies. Accounting standards and regulatory requirements have also proved insufficient in some areas. Last but not least, remuneration systems have in a number of cases not been closely related to the strategy and risk appetite of the company and its longer term interests. The article also suggests that the importance of qualified board oversight and robust risk management is not limited to financial institutions. The remuneration of boards and senior management also remains a highly controversial issue in many OECD countries. The current turmoil suggests a need for the OECD to re-examine the adequacy of its corporate governance principles in these key areas. * This report is published on the responsibility of the OECD Steering Group on Corporate Governance which agreed the report on 11 February 2009. The Secretariat’s draft report was prepared for the Steering Group by Grant Kirkpatrick under the supervision of Mats Isaksson. FINANCIAL MARKET TRENDS – ISSN 1995-2864 - © OECD 2008 1 THE CORPORATE GOVERNANCE LESSONS FROM THE FINANCIAL CRISIS Main conclusions The financial crisis can This article concludes that the financial crisis can be to an be to an important important extent attributed to failures and weaknesses in corporate extent attributed to governance arrangements. -
Natwest Markets N.V. Annual Report and Accounts 2020 Financial Review
NatWest Markets N.V. Annual Report and Accounts 2020 Financial Review Page Description of business Financial review NWM N.V., a licensed bank, operates as an investment banking firm serving corporates and financial institutions in the European Economic Presentation of information 2 Area (‘EEA’). NWM N.V. offers financing and risk solutions which 2 Description of business includes debt capital markets and risk management, as well as trading 2 Performance overview and flow sales that provides liquidity and risk management in rates, Impact of COVID-19 3 currencies, credit, and securitised products. NWM N.V. is based in Chairman's statement 4 Amsterdam with branches authorised in London, Dublin, Frankfurt, Summary consolidated income statement 5 Madrid, Milan, Paris and Stockholm. Consolidated balance sheet 6 On 1 January 2017, due to the balance sheet reduction, RBSH 7 Top and emerging risks Group’s regulation in the Netherlands, and supervision responsibilities, Climate-related disclosures 8 transferred from the European Central Bank (ECB), under the Single Risk and capital management 11 Supervisory Mechanism. The joint Supervisory Team comprising ECB Corporate governance 43 and De Nederlandsche Bank (DNB) conducted the day-to-day Financial statements prudential supervision oversight, back to DNB. The Netherlands Authority for the Financial Markets, Autoriteit Financiële Markten Consolidated income statement 52 (AFM), is responsible for the conduct supervision. Consolidated statement of comprehensive income 52 Consolidated balance sheet 53 UK ring-fencing legislation Consolidated statement of changes in equity 54 The UK ring-fencing legislation required the separation of essential Consolidated cash flow statement 55 banking services from investment banking services from 1 January Accounting policies 56 2019. -
Industry Analysis
Investment Banks “Teaser” Industry Report Industry Analysis Investment Banks Q1 2012 Industry Overview Raising capital by underwriting and acting on behalf of individuals, corporations, and governments in the issuance of securities is the main thrust of investment banks. They also assist companies involved in mergers and acquisitions (M&As) and provide ancillary services like market making, derivatives trading, fixed income instruments, foreign exchange, commodities, and equity securities. Investment banks bannered the 2008 global financial and economic crisis, with U.S. investment bank Bear Sterns saved by J.P. Morgan Chase. Later in the year, Lehman Brothers filed for bankruptcy due to liquidity, leverage, and losses, as Merrill Lynch narrowly escaped such a fate with its purchase by Bank of America. Lehman Brothers was the largest bankruptcy in history at the time, with liabilities of more than $600 billion. Such unprecedented events caused panic in world markets, sending bonds, equities, and other assets into a severe decline. Morgan Stanley survived with an investment from Japan-based Mitsubishi UFJ Financial Group, and Goldman Sachs took a major investment from Warren Buffet’s Berkshire Hathaway. All major financial players took large financial bailouts from the U.S. government. Post-Lehman Brothers, both American and British banks took a huge beating. In the U.K., hundreds of billions of pounds of public money was provided to support HBOS, Lloyds, and Royal Bank of Scotland (RBS). Upon the government’s pressure, Lloyds took over HBOS to create Lloyds Banking Group and after three years, taxpayers end 2011 nursing a loss on their stake of almost £40 billion ($62.4 billion). -
Lehman Brothers Inc. and Barclays Agree to End Litigation and Resolve Claims Wind-Down of Estate Continues
Lehman Brothers Inc. and Barclays Agree to End Litigation and Resolve Claims Wind-Down of Estate Continues New York, June 5, 2015 – James W. Giddens, Trustee for the liquidation of Lehman Brothers Inc. (LBI) under the Securities Investor Protection Act (SIPA), and Barclays Capital Inc. and Barclays Bank PLC today agreed to resolve certain claims and end all ongoing and potential litigation between them. The agreement is consistent with past orders and judgments entered in the litigation and is subject to approval by U.S. Bankruptcy Judge, the Honorable Shelley C. Chapman. “It has always been our duty to prudently and diligently pursue every avenue of recovery for assets we believe belong to the estate, and we did so on behalf of creditors by taking the Barclays litigation all the way to the Supreme Court,” Giddens said. “This agreement ends years of litigation and achieves the best result under the circumstances as winding-down and closing out the estate continues in earnest.” Barclays purchased Lehman’s brokerage business following a hearing in Bankruptcy Court that began on September 19, 2008. Immediately after the purchase, the Trustee set in motion the transfer to Barclays of more than 110,000 customer accounts representing more than $92 billion in customer property. At the same time, the Trustee and Barclays engaged in complex and lengthy litigation over certain disputed assets. The Trustee was successful in Bankruptcy Court after 34 days of trial in a case that presented complex and novel legal issues. Subsequently, various appeals court rulings sided with Barclays. The litigation is now concluded as part of this agreement. -
The Immediate and Lasting Impacts of the 2008 Economic Collapse—Lehman Brothers, General Motors, and the Secured Credit Markets
DO NOT DELETE 4/22/2011 11:28 AM THE IMMEDIATE AND LASTING IMPACTS OF THE 2008 ECONOMIC COLLAPSE—LEHMAN BROTHERS, GENERAL MOTORS, AND THE SECURED CREDIT MARKETS Edward J. Estrada * I. INTRODUCTION Following the economic meltdown that began in the spring of 2008, immediate and longer term ramifications began to ripple through all aspects of the economy. Clearly, these tremors have not yet subsided, and continued fallout will be felt in the coming years. Importantly, even those companies and industries that have seemingly passed through the most immediate wave of im- pacts will be susceptible to the ongoing struggle to achieve sus- tainable growth. Many such companies may experience future de- faults, largely dependent upon the strength and vitality of economic growth in the coming year and their industry perfor- mance in that timeframe. In 2008, as the financial giants of the world began to struggle and collapse, some in the course of a few days, it was widely be- lieved that the credit markets, and in turn the global economy, would completely seize up, causing an economic catastrophe un- paralleled in modern history.1 While tumultuous, what did in fact happen was something far less dramatic, but it had a lasting negative impact, nevertheless. As often happens in crises, some impacts were to be expected and other events were complete surprises. For example, the re- sulting flight from risk by investors (both corporate and individu- * Partner in the Commercial Restructuring and Bankruptcy Group of the New York office of Reed Smith LLP. The author would like to thank Aaron Bourke, an associate in the Commercial Restructuring and Bankruptcy Group of the New York office of Reed Smith LLP, for his contributions to the article. -
Sharp -V- Blank (HBOS) Judgment
Neutral Citation Number: [2019] EWHC 3078 (Ch) Case Nos: HC-2014-000292 HC-2014-001010 HC-2014-001387 HC-2014-001388 HC-2014-001389 HC-2015-000103 HC-2015-000105 IN THE HIGH COURT OF JUSTICE CHANCERY DIVISION Royal Courts of Justice Strand, London, WC2A 2LL Date: 15/11/2019 Before: SIR ALASTAIR NORRIS - - - - - - - - - - - - - - - - - - - - - Between: JOHN MICHAEL SHARP Claimants And the other Claimants listed in the GLO Register - and - (1) SIR MAURICE VICTOR BLANK Defendant (2) JOHN ERIC DANIELS (3) TIMOTHY TOOKEY (4) HELEN WEIR (5) GEORGE TRUETT TATE (6) LLOYDS BANKING GROUP PLC - - - - - - - - - - - - - - - - - - - - - Richard Hill QC, Sebastian Isaac, Jack Rivett and Lara Hassell-Hart (instructed by Harcus Sinclair UK Limited) for the Claimants Helen Davies QC, Tony Singla and Kyle Lawson (instructed by Herbert Smith Freehills LLP) for the Defendants Hearing dates: 17-20, 23-27, 30-31 October 2017; 1-2, 6-9, 13-17,20, 22-23, 27, 29-30 November 2017, 1, 11-15, 18-21 December 2017, 12, 16-19, 22-26, 29-31 January 2018, 1-2, 5- 6, 8, 28 February 2018, 1-2 and 5 March 2018 - - - - - - - - - - - - - - - - - - - - - Approved Judgment I direct that pursuant to CPR PD 39A para 6.1 no official shorthand note shall be taken of this Judgment and that copies of this version as handed down may be treated as authentic. ............................. INDEX: The task in hand 1 The landscape in broad strokes 8 The claim in outline. 29 The legal basis for the claim 41 The factual witnesses. 43 The expert witnesses 59 The facts: the emerging financial -
Lloyds TSB/HBOS Transaction Customers Will See Greater Continuity of HBOS Products, Services and Brands Than Would Otherwise Be the Case
Anticipated acquisition by Lloyds TSB plc of HBOS plc Report to the Secretary of State for Business Enterprise and Regulatory Reform 24 October 2008 Contents I OVERVIEW ................................................................................................ 4 Conclusions ............................................................................................... 4 Merger jurisdiction ...................................................................................... 5 Substantive competition assessment ............................................................. 5 Remedies................................................................................................... 7 Public interest consideration ......................................................................... 7 II PROCEDURAL OVERVIEW ........................................................................... 8 III PARTIES AND TRANSACTION.....................................................................10 The parties................................................................................................10 Transaction rationale ..................................................................................10 IV JURISDICTION AND LEGAL TEST ................................................................11 V THE COUNTERFACTUAL ............................................................................13 Introduction to the OFT's general approach to the counterfactual.....................13 The appropriate counterfactual in this case ...................................................14 -
Rating Action, Barclays Bank UK
Rating Action: Moody's takes rating actions on Barclays, Lloyds, Santander UK, Nationwide and Close Brothers, following update to banks methodology 13 Jul 2021 London, 13 July 2021 -- Moody's Investors Service (Moody's) has today taken rating actions on Barclays, Lloyds, Santander UK and Close Brothers banking groups and on Nationwide Building Society, including the upgrade of the long-term senior ratings of Lloyds Banking Group plc and Close Brothers Group plc. The rating actions were driven by revisions to Moody's Advanced Loss Given Failure (Advanced LGF) framework, which is applied to banks operating in jurisdictions with Operational Resolution Regimes, following the publication of Moody's updated Banks Methodology on 9 July 2021. This methodology is available at this link: https://www.moodys.com/researchdocumentcontentpage.aspx?docid=PBC_1269625 . A full list of affected ratings and assessments can be found at the end of this Press Release. RATINGS RATIONALE Today's rating actions were driven by revisions to the Advanced Loss Given Failure framework within Moody's updated Banks Methodology: a revised notching guidance table, with thresholds at lower levels of subordination and volume in the liability structure have been applied to the UK banks and Additional Tier 1 (AT1) securities issued by banks domiciled in the UK have been included in the Advanced LGF framework, eliminating the previous analytical distinction between those high trigger instruments that were deemed to provide equity-like absorption of losses before the point of failure and other AT1 securities. Moody's removal of equity credit for high trigger Additional Tier 1 (AT1) instruments from banks' going concern capital means that affected banks have reduced capacity to absorb unexpected losses before the point of failure, everything else being equal. -
As Parex Banka
AS PAREX BANKA ANNUAL REPORT FOR THE YEAR ENDED 31 DECEMBER 2008 TOGETHER WITH INDEPENDENT AUDITORS’ REPORT Table of Contents Management Report 3 Management of the Bank 7 Statement of Responsibility of the Management 8 Financial Statements: Statements of Income 9 Balance Sheets 10 Statements of Changes in Equity 11 Statements of Cash Flows 13 Notes 14 Auditors’ Report 80 AS Parex banka Smilšu 3, Riga, LV-1522, Latvia Phone: (371) 67010 000 Facsimile: (371) 67010 001 Registration number: 40003074590 2 AS Parex banka Management Report The year 2008 brought major change to Parex banka , including substantial changes in shareholders structure and the management of the bank in the last months of 2008. This report has been prepared by the new Management Board and Supervisory Council of the Bank and they are committed to leading the Bank into a new phase of development. Financial crisis and its implications on Parex banka The year of 2008 brought unprecedented challenges for the financial sector both in Latvia and worldwide. The global credit crunch, starting in the United States of America, caused a chain reaction all over the world and intensified the economic difficulties in Latvia. The financial sector in Latvia has been affected in a number of ways, mostly through reduced availability of funding and liquidity from international financial markets, a weakening economy and the resulting decline of asset quality. The crisis has necessitated the adoption of new approaches to the financial sector and has led to a thorough reconsideration of its practices. Parex banka itself experienced a severe impact from the crisis of 2008. -
Lehman Brothers Holdings Inc
Simpson Thacher & Bartlett LLP 900 G STREET, NW WASHINGTON, D.C. 20001 TELEPHONE: +1-202-636-5500 FACSIMILE: +1-202-636-5502 Direct Dial Number E-mail Address +1-202-636-5543 [email protected] August 12, 2019 VIA EMAIL Mr. Paul Cellupica Division of Investment Management Securities and Exchange Commission 100 F Street, N.E. Washington, DC 20549 Re: No-Action Relief Under Section 7 of the Investment Company Act of 1940 Dear Mr. Cellupica: On behalf of Lehman Brothers Holdings Inc. ("Lehman"), we respectfully request that the staff ofthe Division ofInvestment Management (the "Staff') confirm that it will not recommend enforcement action to the Securities and Exchange Commission (the "SEC") against certain Lehman employee security companies (the "ESCs"), their Replacement GPs (as defined below) or Third-Party Advisers (as defined below), if such ESCs continue to operate in the fashion described below without registration as investment companies under the Investment Company Act of 1940, as amended (the "1940 Act"). Specifically, Lehman seeks assurance that each ESC for which Lehman or a Lehman affiliate serves as general partner and for which certain Third-Party Advisers serve as investment adviser may continue operations, without registering as an investment company under Section 8 ofthe 1940 Act, following the Lehman liquidation, discussed below, with the Replacement GPs serving as general partner, in reliance on the exemption in Section 7 of the 1940 Act for companies that are engaged in "transactions which are merely incidental to the dissolution of an investment company." 1 1 The ESCs for which Lehman seeks assurance are Co-Investment Capital Partners L.P.; Co-Investment Capital Partners Cayman AIV I, L.P.; Offshore Co-Investment Capital Partners Holdings L.P.; Secondary Opportunities Capital Partners II L.P.; Offshore Secondary Opportunities Capital Partners II L.P.; Crossroads Capital Partners II L.P.; NEW YORK BEIJING HONG KONG HOUSTON LONDON LOS ANGELES PALO ALTO SAO PAULO TOKYO Simpson Thacher & Bartlett LLP Mr. -
Ten Years After Lehman Brothers' Collapse: Why Due Diligence
Ten years after Lehman Brothers’ collapse: why due diligence remains essential Luca BERNARDI !2 ! Table of Contents Preface p. 4 1. Financial regulations entered into force between 2008 and 2018 p. 5 1.1. Basel III or the “clash” between technocrats and stakeholders p. 5 1.2. The Dodd-Frank Act and its collateral effect on Conflict Minerals p. 9 1.3. MiFID II and the sharpen notion of conflict of interest p. 11 2. Are regulators and governments addressing all issues? p. 14 2.1. From the Agora to covert meeting rooms p. 15 2.2. Too big to jail? p. 17 2.3. The necessary establishment of a culture of corporate compliance p. 19 3. Next Steps - Enhanced Due Diligence to mitigate risks p. 23 About us p. 25 !3 ! Preface Lehman Brothers’ failure will remain a remin- Hence, 10 years down the line, why does per- der of some of the dysfunctions in the banking forming enhanced due diligence remains es- and regulatory apparatus that drove the global sential? economy off a cliff. This paper seeks to discuss some of the finan- Thousands of financial market participants cial regulations entered into force in the USA were impacted. and EU after Lehman Brother’s collapse and its impacts on due diligence processes. The investment bank’s bankruptcy was, in terms of assets, the largest in the history of Second, a few arguments will be presented to corporate America. The consequences of the identify political and economic issues that go- 2008 deals regarding issuance of residential vernments and regulators have yet to address. -
Lehman Brothers Dismantles in Bankruptcy
Lehman Brothers Dismantles in Bankruptcy DAVID N. CRAPO The author reviews developments in the largest bankruptcy filing to date. eptember brought the largest bankruptcy filing in U.S. history. On September 15, 2008, after failed efforts at to obtain a federal bail- out or an out-of-court acquisition by Barclays Capital Inc. S(“Barclays”), failed, Lehman Brothers Holdings, Inc. (“LBHI”) filed a voluntary petition for relief under Chapter 11 of the United States Bankruptcy Code 1 in the United States Bankruptcy Court for the Southern District of New York (“Bankruptcy Court”). Shortly thereafter, the Lehman Brothers entity that owned the Lehman Brothers headquarters in Manhattan also filed a Chapter 11 petition. On September 19, 2008, a liq - uidation proceeding under the Securities Investor Protection Act of 1979 (“SIPA”) was commenced against Lehman Brothers Inc. (“LBI”), the Lehman Brothers entity that operated, inter alia , the Lehman Brothers North American broker/dealer business ( see “the Stock-Broker Liquidation of Lehman Brothers, Inc., below). The SIPA case was trans - ferred to the bankruptcy court. In early October, 15 additional Lehman Brothers entities filed Chapter 11 petitions in the Bankruptcy Court. David N. Crapo, counsel in the Newark, N.J. office of Gibbons P.C., has exten - sive experience in the fields of bankruptcy, debtor/creditor law and commercial law. He can be reached at [email protected]. 702 LEHMAN BROTHERS DISMANTLES IN BANKRUPTCY THE SALE OF THE NORTH AMERICAN BROKER-DEALER BUSINESS One of the primary goals of the Lehman Brothers bankruptcy pro - ceedings has been to expeditiously liquidate various assets and lines of business of the Lehman Brothers entities to preserve value, and the pur - pose of the SIPA proceeding was the transfer of customer accounts so that customers would have access to their assets.