By Joe Churcher, PA
Friday, 28 March 2008
City whistleblowers could soon be offered immunity from prosecution under plans to beef up the UK's financial watchdog, Chancellor Alistair Darling has indicated.
The Government was urged to grant the Financial Services Authority (FSA) US-style powers in the wake of last week's slump in a major bank's share price amid claims of market manipulation.
A London-based hedge fund was reported to have circulated rumours about UK companies, including Britain's biggest mortgage lender HBOS in a bid to make money when their share prices fell.
Amid global financial turmoil, Mr Darling told the Guardian he wanted to see a crackdown and that that meant the authorities needed "the tools to do the job".
"I can't allow us to get into a situation where people quite deliberately manipulate markets for personal gain and with the potential to de stabilise the financial system," he said.
"We have a duty to ensure we have clean and efficient markets. We will come down hard on people manipulating the system.
"People are getting away with it and the time has come for us to start looking at it again.
"If a handful of people are up to no good we have to make sure the authorities have the tools to do the job."
The Guardian said FSA investigators would be given the "specified prosecutor" status already enjoyed by tax officials, the Serious Fraud Office and the director of public prosecutions.
A spokeswoman for the FSA, which has asked for the powers, welcomed the move, part of a package of measures designed to tackle the present worldwide period of uncertainty.
Friday, 28 March 2008
City whistleblowers could soon be offered immunity from prosecution under plans to beef up the UK's financial watchdog, Chancellor Alistair Darling has indicated.
The Government was urged to grant the Financial Services Authority (FSA) US-style powers in the wake of last week's slump in a major bank's share price amid claims of market manipulation.
A London-based hedge fund was reported to have circulated rumours about UK companies, including Britain's biggest mortgage lender HBOS in a bid to make money when their share prices fell.
Amid global financial turmoil, Mr Darling told the Guardian he wanted to see a crackdown and that that meant the authorities needed "the tools to do the job".
"I can't allow us to get into a situation where people quite deliberately manipulate markets for personal gain and with the potential to de stabilise the financial system," he said.
"We have a duty to ensure we have clean and efficient markets. We will come down hard on people manipulating the system.
"People are getting away with it and the time has come for us to start looking at it again.
"If a handful of people are up to no good we have to make sure the authorities have the tools to do the job."
The Guardian said FSA investigators would be given the "specified prosecutor" status already enjoyed by tax officials, the Serious Fraud Office and the director of public prosecutions.
A spokeswoman for the FSA, which has asked for the powers, welcomed the move, part of a package of measures designed to tackle the present worldwide period of uncertainty.
Immunity from prosecution for those who blow whistle on market abuses
Alistair Darling is to give Britain's financial watchdog new powers to clean up the City by adopting a US-style whistle-blower system that will grant immunity from prosecution in return for evidence about market manipulation.
Alarmed by the illegal raid that drove down the share price of HBOS last week, the chancellor will outline plans for new legislation over the next few months that will give the Financial Services Authority plea bargaining powers already granted to tax officials, the Serious Fraud Office and the director of public prosecutions.
In an interview with the Guardian, Darling said: "I can't allow us to get into a situation where people quite deliberately manipulate markets for personal gain and with the potential to destabilise the financial system."
He added: "We have a duty to ensure we have clean and efficient markets. We will come down hard on people manipulating the system."
Under its current powers, the FSA has often found it hard to take action against those suspected of wrongdoing in the markets, and has been urging the Treasury to bring in tougher measures.
After his lukewarm reaction to a plea bargaining system several years ago, Darling said the government was now convinced that it was needed.
"People don't tend to note down in minute detail what they are doing. People are getting away with it and the time has come for us to start looking at it again ... If a handful of people are up to no good we have to make sure the authorities have the tools to do the job."
Under the proposals, FSA officials would be given "specified prosecutor status", which would allow them to grant immunity from prosecution in return for evidence against people suspected of market manipulation.
One official said: "We want people to shop those involved. In effect, we want a system of City grasses."
Darling also expressed concern about the deepening credit crunch, saying that the announcement yesterday of higher mortgage rates from the Nationwide and several other lenders was "a demonstration of the unusual situation we find ourselves in at the moment. It makes it all the more important that we do everything we can to achieve stability."
The chancellor said his plans to beef up the powers of the FSA were part of a package of measures needed, domestically and internationally, to cope with a "period of unprecedented uncertainty".
Darling predicted that one result of the credit crunch would be that "imprudent lending" would come to an end. "It can't make sense to lend 125% of the value of a property", he said. "One effect [of the financial turmoil] is that people will be much more sensible about what they borrow and what they lend."
Darling said he had been holding talks with the US Treasury secretary, Henry Paulson, about introducing a system of plea bargaining akin to that used by America's Securities and Exchange Commission, and about coordinated action to unblock the financial system.
The root cause of the problem, he said, was that banks had invested in securities based on the US mortgage market, and that these could no longer be traded as a result of the crash in American real estate. "A significant number of banks have got on their books assets that they could trade 12 months ago but for which there is no market today."
The Bank of England is working with the major UK high street banks on ways in which the authorities could free up the market in US mortgage-backed securities. One option being considered was for the Bank of England to widen the range of assets it would accept as collateral. The chancellor said help for the financial system was justified by its potential to destabilise what he called the "resilient" UK economy.
Alarmed by the illegal raid that drove down the share price of HBOS last week, the chancellor will outline plans for new legislation over the next few months that will give the Financial Services Authority plea bargaining powers already granted to tax officials, the Serious Fraud Office and the director of public prosecutions.
In an interview with the Guardian, Darling said: "I can't allow us to get into a situation where people quite deliberately manipulate markets for personal gain and with the potential to destabilise the financial system."
He added: "We have a duty to ensure we have clean and efficient markets. We will come down hard on people manipulating the system."
Under its current powers, the FSA has often found it hard to take action against those suspected of wrongdoing in the markets, and has been urging the Treasury to bring in tougher measures.
After his lukewarm reaction to a plea bargaining system several years ago, Darling said the government was now convinced that it was needed.
"People don't tend to note down in minute detail what they are doing. People are getting away with it and the time has come for us to start looking at it again ... If a handful of people are up to no good we have to make sure the authorities have the tools to do the job."
Under the proposals, FSA officials would be given "specified prosecutor status", which would allow them to grant immunity from prosecution in return for evidence against people suspected of market manipulation.
One official said: "We want people to shop those involved. In effect, we want a system of City grasses."
Darling also expressed concern about the deepening credit crunch, saying that the announcement yesterday of higher mortgage rates from the Nationwide and several other lenders was "a demonstration of the unusual situation we find ourselves in at the moment. It makes it all the more important that we do everything we can to achieve stability."
The chancellor said his plans to beef up the powers of the FSA were part of a package of measures needed, domestically and internationally, to cope with a "period of unprecedented uncertainty".
Darling predicted that one result of the credit crunch would be that "imprudent lending" would come to an end. "It can't make sense to lend 125% of the value of a property", he said. "One effect [of the financial turmoil] is that people will be much more sensible about what they borrow and what they lend."
Darling said he had been holding talks with the US Treasury secretary, Henry Paulson, about introducing a system of plea bargaining akin to that used by America's Securities and Exchange Commission, and about coordinated action to unblock the financial system.
The root cause of the problem, he said, was that banks had invested in securities based on the US mortgage market, and that these could no longer be traded as a result of the crash in American real estate. "A significant number of banks have got on their books assets that they could trade 12 months ago but for which there is no market today."
The Bank of England is working with the major UK high street banks on ways in which the authorities could free up the market in US mortgage-backed securities. One option being considered was for the Bank of England to widen the range of assets it would accept as collateral. The chancellor said help for the financial system was justified by its potential to destabilise what he called the "resilient" UK economy.
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