PBI’s monthly summary of the latest key regulatory and compliance-related developments in private banking and wealth management.
China to raise cap on foreign ownership in securities firms
Go deeper with GlobalData
Access deeper industry intelligence
Experience unmatched clarity with a single platform that combines unique data, AI, and human expertise.
China’s securities regulator has introduced new rules that will enable foreign investors to own majority stakes in local securities businesses. Under the new rules, the ceiling on foreign ownership in securities businesses in China has been raised from 49% to 51% with immediate effect.
At the same time, joint-venture securities companies will now be allowed to apply for securities-related business licences. The rules will also equalise the caps on foreign ownership in listed as well as unlisted securities firms.
“According to the new rule, the aggregate foreign ownership in any listed domestic securities company shall conform to not exceeding the overall opening-up commitment of the Chinese domestic securities industry,” the regulator said.
The watchdog added that foreign shareholders should have a good international reputation, as well as good scale, revenue and profit for the last three years.
Goldman Sachs fined nearly $110m for improper forex trading practices
Goldman Sachs has been fined a total of $109.5m by US regulators to settle allegations of improperly sharing customer information with other global banks to manipulate foreign exchange prices.
The company will pay around $55m each to New York’s Department of Financial Services (DFS) and the Federal Reserve Board. The move follows a probe that revealed that the business allegedly failed to effectively monitor the activities of its forex traders in electronic chat rooms between 2008 and 2013.
The regulators alleged these traders discussed trading positions with their rivals during this period using code names to reap higher profit from forex trades, thereby putting clients at a disadvantage.
The company has been ordered to submit an enhanced written internal compliance programme and written internal audit programme to ensure similar lapses do not occur again.
DFS’s financial services superintendent, Maria Vullo, said: “DFS’s investigation revealed that certain Goldman traders exploited the company’s ineffective oversight of its foreign exchange business by improperly sharing customer information, which allowed the bank’s foreign exchange traders and others to violate New York State law over the course of several years.
“DFS recognises the steps taken by the company to ensure compliance with applicable laws, in entering into today’s consent order and to the agreed reforms.”
Dolfin secures custody and depositary licence in Malta
UK-based investment business Dolfin has received a custody and depositary licence from the Malta Financial Services Authority.
The move will allow the company to deliver investment services for private and institutional clients from its new office in Valetta. It will also enable Dolfin’s UK private clients to custody their assets with the business in Malta.
“Malta has a growing financial ecosystem, particularly in the fund space. However, many asset managers wanting to set up here have been underserved in custody and depositary services. The award of our licence will change that,” noted Ramon Bondin, head of Dolfin’s Malta business.
The move will particularly benefit Maltabased collective investment schemes and trusts as well as other wealth structures requiring a local custodian or depositary, Dolphin said.
Dolfin CEO Denis Nagy said: “Malta is an increasingly important hub for financial services, particularly asset management and private wealth. Our Maltese operations can now leverage our infrastructure, trading counterparties worldwide and our network of the best global sub-custodians.
“The extension of our services in Europe while maintaining proximity to the UK makes strategic sense for our clients; this is a significant step for Dolfin.”
Wells Fargo agrees $480m payment to settle securities fraud suit
Wells Fargo has agreed to pay $480m to resolve a class action lawsuit brought by shareholders over alleged securities fraud.
The suit alleged that the bank had misstated or omitted certain details regarding its sales practices. The bank strongly denied the charges, saying it signed the agreement in principle in order to “avoid the cost and disruption of further litigation”.
The suit was filed with the US federal court in the Northern District of California. The bank said the agreement to resolve the suit was in principle and subject to final approval by the court.
Wells Fargo CEO Tim Sloan said: “We are pleased to reach this agreement in principle, and believe that moving to put this case behind us is in the best interest of our team members, customers, investors and other stakeholders.
“We are making strong progress in our work to rebuild trust, and this represents another step forward.”
The settlement follows a difficult few years for Wells Fargo. It came under scrutiny in 2015 for the illegal sales practice of secretly opening unauthorised deposit and credit card accounts, and was consequently fined $185m by federal and state regulators.
In April 2018, the bank was fined $1bn by US regulators to settle charges of unsound practices in its mortgage and auto lending businesses.
