Prosecutions for white collar crime in the financial services sector are likely to increase in 2014 following an 88% rise in the number of whistleblowing reports received by the FCA’s ‘Whistleblowing desk’, according to international law firm Pinsent Masons.
Data obtained from the Financial Conduct Authority by Pinsent Masons shows that whistleblowing reports have increased by 88% since the FCA took over from the FSA in April 2013. Reports increased from an average of 338 a month in the FSA’s final year to an average of 638 a month in the first seven months since the FCA took over as regulator.
1,118 reports (since March 2012) were deemed serious enough to be pursued by the regulator; of these roughly 60% (683) were about general regulatory concerns. Investigations into more serious wrongdoing were fairly low. There were just 4 reports of ‘Misappropriation of client Money’, 23 of ‘Insider trading’, 21 of ‘Market manipulation’ and 25 cases of ‘Money laundering’ were pursued.
Michael Ruck, a senior financial services enforcement lawyer at Pinsent Masons and formerly with the Financial Conduct Authority says: “The recent rise in whistleblowing reports is not necessarily a result of more wrongdoing in the City. Instead it is likely the result of the combination of increased focus on compliance and the tightening of controls following criticism from the financial regulator.
“People working in FCA regulated firms are becoming increasingly aware of their reporting obligations. The threat of multi million pound fines and a new push toward personal accountability means that staff at authorized firms, their suppliers and clients are all now very aware of their compliance obligations.
“The UK already has some of the highest whistleblowing rates world wide* and numbers are set to increase even further if plans to financially incentivise whistleblowers who report crimes are implemented.”
“Under new government plans Whistle-blowers who report financial crime could be rewarded with a cut of the money they gain back for the taxman. No doubt this will lead to a surge of white-collar informants seeking big payouts.”