A couple of notoriously lax securities regulators would like to see the adjective “notoriously lax” excised from before their names.

First, to Toronto, where the Ontario Securities Commission is looking longingly at Preet Bharara’s ability to command the entire FBI to stop what it’s doing to surreptitiously tape some mid-level hedge fund analyst’s phone calls.

Canada’s largest capital markets regulator is pushing for an amendment to the country’s Criminal Code that would allow investigators to use wiretaps to investigate insider trading….

“In my opinion, we are missing a key tool that would assist in more effectively enforcing provisions against insider trading,” he said in a speech to a Toronto business audience.

“Wiretaps would allow us to obtain direct evidence of the intention – I underline intention – to engage in illegal insider trading and tipping,” he said. Tipping refers to the practice of passing along sensitive information that could then be used for trading.

The wiretapping would not be done by the regulator itself, but rather by provincial and federal police that work with regulators to investigate white collar crimes. Wetston said the OSC has been in early-stage talks with police about the issue….

Canadian regulators have long battled a reputation for being too soft on white collar crime due to cases such as the Bre-X gold salting fraud in the 1990s, which cost investors billions. Nobody was charged with fraud in the cause, and the lone figure who was charged with insider trading was acquitted.

Next, to Frankfurt, where the Bundesanstalt für Finanzdienstleistungsaufsicht is trying to live up to its formidably fearsome name by swinging its newfound Eier in the general direction of the biggest and easiest target.

The Federal Financial Supervisory Authority, known as BaFin, has long been criticized as lax on banks and cowed by politicians. But recently, BaFin has started making bankers squirm.

The regulator has publicly browbeaten Deutsche Bank, saying it has failed to change an internal culture stressing profits over ethics. It has pressed Deutsche Bank to fire traders for misbehavior, vetoed the promotion of a senior executive, and has forced the bank to change its accounting for a big transaction, according to people familiar with the matter. To enforce tightened rules, BaFin representatives attend Deutsche Bank’s high-level gatherings….

In the past, BaFin sometimes appeared to go to bat for Deutsche Bank. When British regulators pressured Deutsche Bank to convert its U.K. operations into a stand-alone legal entity subject to British rules, BaFin officials intervened, arguing such pressure was inappropriate, according to people familiar with the matter. BaFin prevailed in the dispute.

Canada regulator seeks wiretap powers for insider-trading cases [Reuters]
German Financial Watchdog Bites Back [WSJ]

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Comments (2)

  1. Posted by Quant me maybe ... | March 28, 2014 at 12:17 PM

    Finanzdienstleistungsaufsicht!

    > The sound your wife makes when she finds out about your girlfriend.

  2. Posted by Guest | March 28, 2014 at 12:39 PM

    When the Canadians can put an end to the open manipulation of the TSX-V on the internet they can complain about not being allowed to play with grown up toys. Until then, "notoriously lax" is actually a compliment.