NY regulator: Some banks aren't complying with settlement pacts

Reuters News
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Posted: Jun 22, 2016 12:23 PM

By Suzanne Barlyn

NEW YORK (Reuters) - Monitors who are keeping tabs on financial institutions that settled misconduct charges with New York State's financial regulator have uncovered "serious compliance failures" and new improper behavior, the agency's head said on Wednesday.

Monitors have discovered intentional misconduct, including improper foreign exchange trading practices, right up to the present day, said Maria Vullo, superintendent of the New York State Department of Financial Services. She declined to name the banks.

"Some of the discoveries are very troubling," Vullo told an audience of legal and compliance professionals in New York.

"There could very well be enforcement actions," she told Reuters.

The misconduct coming to light was not part of the regulator's initial investigations, Vullo said. The remarks were her first since the state Senate confirmed her last week to lead the agency.

The department oversees banks in the state, including branches of some of the world's largest financial institutions, and can revoke their licenses for doing business.

The agency first plans to work with the institutions in question to impose safeguards and improve the culture that led to the misconduct and compliance failures, Vullo said.

The department is involved in about 12 cases in which monitors have been appointed to check up on whether financial institutions are complying with the terms.

Some of those monitorships overlap with others imposed by a number of authorities, including the U.S. Department of Justice, that are involved with certain cases along with the state agency.

Cases involving multiple authorities include agreements last year with Barclays Plc, which agreed to pay a total of $2.4 billion to settle allegations of foreign exchange manipulation by the U.S. Department of Justice, Commodities Futures Trading Commission and Federal Reserve, as well as the New York regulator. Barclay's was also fined a record 284 million pounds ($441 million) by Britain's Financial Conduct Authority.

Vullo declined to comment on whether other authorities or regulators had reached conclusions about misconduct that are similar to those of her agency.

Her remarks follow a U.S. monitor's findings that HSBC Holdings Plc had not done enough to thwart money laundering, despite making significant progress since reaching a landmark 2012 settlement with U.S. prosecutors.

(Reporting by Suzanne Barlyn; Editing by Lisa Von Ahn)