A study of compliance post-OFT infringement action

This article considers compliance with competition law among a particular sub-set of UK companies. The research was principally motivated by the reform of UK competition law in the late 1990's and the introduction of new investigatory and fining powers for the UK competition authorities, with potentially very serious consequences for companies in breach of competition law. There has been fairly extensive research into competition law compliance in Australia, and in particular, a Report based on a recent ACCC Enforcement and Compliance Survey noted that:- 'Those who have interacted with or been investigated by the ACCC generally report themselves to be more compliant.' Accordingly, in this research we sought to ascertain the extent to which an infringement finding by the OFT altered awareness of, attitudes to, and methods of compliance with competition law. This was undertaken by forwarding a questionnaire to all parties which were the subject of an infringement decision by the OFT under the Competition Act 1998. The research considers the extent to which competition law compliance, and the motivations for instituting an effective compliance programme, have been affected by enforcement action by the Office of Fair Trading under the Competition Act 1998

Shareholder activism in the UK: types of activists, forms of activism, and their impact on a target’s performance

Considering the recent rapid expansion of shareholder activism phenomenon in the United Kingdom (UK) and the vast amount of resources committed to it by corporations, government and investors, its effectiveness has become a crucial subject for investigation. This article analyzes organizational outcomes of shareholder activism in the UK. This research is based on a unique comprehensive database of shareholder activism events during the period of 1998–2008. We provide a detailed account of different types of activists, activism strategies and shareholder demands associated with the events of activism. Our findings show that the effectiveness of shareholder activism in terms of abnormal stock-market returns varies dramatically depending on its form, type of investor and the nature of investor proposals

An overview on the inconsistencies of approach in regulating the capital position of banks: Will the United Kingdom step out of line with Europe?

After the collapse of a number of banking institutions and bailouts of banks by governments, regulators have taken a different attitude and now appear keen to take regulation seriously when it comes to ensuring that banks have adequate capital and sufficient liquidity. Not only that, but in the United Kingdom, the Independent Commission on Banking Reform has made proposals with regard to the capital position of banks. This article, which is an overview, will look at matters from a UK perspective and at the proposals for reform. This article, after its introduction and summary, will look at a number of areas: first, the reforms made by Basel III; second, the regulation of Systemically Important Financial Institutions (Sifis) and the proposals for dealing with these; third, some matters in relation to lending that relate to capital and liquidity generally; fourth, increased stress testing of banks; fifth, derivatives and risk taking and the new proposed structure of regulation in the United Kingdom; sixth, the war of spin between regulators and banks; seventh, Shadow Banking; and eighth, The Independent Commission on Banking Reform and its proposals for reform. It will also be a theme that the various proposals lack consistency and that this could lead to regulatory arbitrage. It is already clear that there are inconsistencies between the various regulatory organisations, with proposals in the United Kingdom indicating that banks will be required to keep much higher levels of capital than those proposed by Basel and the European Community. The views of those who have pointed out inconsistencies between the United Kingdom and Basel/Europe have been highlighted

The legal framework for financial advertising:curbing behavioural exploitation

Policy makers and behavioural finance scholars express growing concern that marketing practices by financial institutions exploit retail investors’ behavioural biases. Investor protection regulation should thus address these marketing practices and include mechanisms curbing behavioural exploitation. That raises the question whether the marketing communications regime of the new Markets in Financial Instruments Directive can live up to this demand. This article develops a regulatory model that integrates behavioural finance insights into the new marketing communications regime. It then determines how regulatory authorities can apply this model when they interpret and apply specific regulatory requirements. It demonstrates how a regulatory authority or a court can translate empirical behavioural finance research findings into legal arguments when assessing whether marketing practices can significantly distort a model investor’s decision-making process. The article further establishes that the detailed requirements imposed on investment firms by the new Markets in Financial Instruments Directive are necessary in order to protect investors from behavioural exploitation. Finally, the article submits policy proposals that aim to protect investors more effectively from behavioural exploitation

Art in corporate governance: A Deweyan perspective on board experience

Corporate governance sits at the intersection of many aspects of disciplines from business, management, finance and accounting. The point of departure for the overwhelming portion of studies concerns the ugliness of greed, ambition, misdemeanors and malfeasance of corporations, their directors, and those actors hold own shares in them. This essay takes a rather different starting point. Drawing upon insights from a radically different field, it uses the discussion of aesthetics in Dewey’s treatise on art (1934/1958) to ask what motivates directors to act in ways that constitute the attention and engagement that we associate with the effectiveness of boards. Using Dewey’s thinking about aesthetic experience, this paper compares it with accounts of the experience of corporate boards, both in the literature and in the personal experience of the author. These observations point to need to reflect on motivation when considering both the practice of corporate governance and the policy frameworks in which it operates

Redressing Risk Oversight Failure in UK and US Listed Companies: Lessons from the RBS and Citigroup Litigation

In the decade since the onset of the 2007-08 financial crisis, there have been numerous calls for the directors of failed or rescued banks to be held liable for the significant losses that these collapses inflicted on investors and the general public. In the UK, the high-profile RBS Rights Issue Litigation has come to represent something of a fulcrum of domestic concerns in this regard. Notwithstanding their mixed results, securities law actions alleging disclosure failure have been a fairly popular avenue of attempted redress for investors who were burned in the crisis, as exemplified most pertinently by the successful US litigation emanating from the implosion of Citigroup in 2008. By contrast, directors’ duties actions premised on alleged risk oversight failure in collapsed banks have enjoyed only limited success in the United States, and no real success whatsoever in the UK. This is a remarkable fact, given that the director’s corporate law duty of care would prima facie seem the most direct and overt means of redressing investor losses in such instances. The implication is that in UK (as in US) listed companies today, the duty of care is being progressively usurped in this regard by alternative securities law mechanisms, rendering corporate law increasingly redundant as a meaningful lever of director accountability.I am grateful to the Leverhulme Trust for funding the time involved in the researching and writing of this article, and also to Cambridge 3CL and Jonathan Lau for research assistance. My work on this project was further supported by receipt of a Ross Parsons Visitorship from Sydney Law School in March 2016, which I am likewise grateful for