The Financial Conduct Authority (FCA) has fined a multinational investment bank and financial services company (the Firm) £27,599,400 for failing to ensure it provided complete and accurate information to approximately 86 million reportable transactions and erroneously reporting 49 million transactions to the FCA. The Final Notice states that over a period of more than nine years, the Firm made 135 million errors in transaction reporting, which was in breach of FCA rules.
The FCA found that during the relevant period (November 2007 – May 2017), the Firm failed to have in place adequate systems and controls to ensure that reference to ‘static’ data used for various mandatory fields in the transaction reports were complete and accurate; failed to have adequate change management controls; and failed to undertake appropriate testing to ensure the completeness and accuracy of transaction reports.
The FCA had previously fined the Firm £100,000 in November 2005 for transaction reporting failings. Following a number of reviews undertaken by the Firm as to their transaction reporting arrangements, in August 2013 the Firm initiated a comprehensive programme of review and remediation (the R3 Programme). Through the R3 Programme, the Firm self-identified most of the reporting errors described in the FCA’s Final Notice. By July 2014, the Firm had either remediated or initiated key reforms to its reporting arrangements. A further audit in October 2016 established that these reforms were effective.
The FCA considered both the old and new penalty regime, given the conduct at issue occurred both before and after March 2010. Under the new penalty regime, the FCA attributed a value for each transaction that the Firm failed to report since March 2010 and a value per report filed in error. The FCA considered aggravating factors to be the previous penalty imposed on the Firm in 2005 and precedent guidance from FCA Final Notices as to similar circumstances. Mitigating factors included the reviews and projects undertaken by the Firm which led to some self-identification and cooperation with the FCA.