The Securities & Exchange Commission in the US has copped serious flack over its handling of the alleged Madoff Ponzi scheme and it looks like it is the turn of the UK's Financial Services Authority (FSA) to cop some flak - in fact it is facing a multimillion pound compensation claim from investors in collapsed fund, GFX Capital Markets.
According to a report in The Times, the FSA knew about concerns pertaining to GFX's business practices and that its boss Terry Freeman had changed his name after earlier being disqualified until 2012 as a company director.
Lawyers for investors in GFX which collapsed with estimated losses of £44 million, claim that the FSA could have acted sooner based on the knowledge it possessed. Is this the first of many such claims that we are likely to see against the FSA as angry investors seek retribution for their losses?
While it is all to easy to use the regulators as a scape goat for a lack of due diligence by investor or investment funds, this crisis raises serious questions about the regulatory oversight and due diligence conducted by the FSA and perhaps suggests that more regulation or granting more powers to the FSA is not going to be the panacea some hope it might.
According to a report in The Times, the FSA knew about concerns pertaining to GFX's business practices and that its boss Terry Freeman had changed his name after earlier being disqualified until 2012 as a company director.
Lawyers for investors in GFX which collapsed with estimated losses of £44 million, claim that the FSA could have acted sooner based on the knowledge it possessed. Is this the first of many such claims that we are likely to see against the FSA as angry investors seek retribution for their losses?
While it is all to easy to use the regulators as a scape goat for a lack of due diligence by investor or investment funds, this crisis raises serious questions about the regulatory oversight and due diligence conducted by the FSA and perhaps suggests that more regulation or granting more powers to the FSA is not going to be the panacea some hope it might.
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