Operational Risk: The vulnerability of the system

• A solo trader and a computer programme!
• A fraudulent mind ad a lagging regulator!
• From Nick Leeson to Navinder Singh Sarao, financial institutions are struggling with human resource risk.
• If you have a fraudulent mind and a manipulatable algorithm, nothing in this market is real. It is then an unreal, manoeuvrable  market where the figures are exaggerated and in control of some criminal intent trader.
• It is a failure of values in the financial world and the helplessness of a  supervisor.From LIBOR  fixing to mis-selling to to 'flash crash' , UK  seems to be  the host to valueless finance. 

"Bank supervisors cannot prevent all fraud or illegal conduct or forestall all undesirable behavior in large, complex financial institutions. But we can help create more resilient, less complex, and better managed organizations that promote, rather than undermine, financial stability."[1]

All the BIS guidelines on operational risk cannot eradicate fraud.  Let the investors beware.

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[1] Testimony by Mr William C. Dudley  President and Chief Executive Officer of the Federal Reserve Bank of New York, before the Senate Committee on Banking, Housing, and Urban Affairs Financial Institutions and Consumer Protection Subcommittee, Washington DC, 21 November 2014.

HSBC: Ths Glocal Bank : Thinking Small, Acting Illegal? TBTF?

HSBC - Regulators and Supervisors who failed?

It is not that HSBC has just been charged with abetting tax evasion. It has faced specific charges of laundering in more than one jurisdiction. HSBC has wrongly sold payment protection insurance; it has been charged with having given terrorists, drug cartels, and criminals access to the US financial system. It was involved in LIBOR fixing.

With such intensive and extensive misdemeanors, how could the home country and host country regulators have overlooked the manipulations and machinations of HSBC? Where were the Colleges of regulators? 

HSBC Europe's largest bank had many home supervisors and regulators:

1. The Financial Services Act 2012 established an independent Financial Policy Committee (FPC) a new prudential regulator of the Bank of England.
2. Prudential Regulation Authority (PRA) authorizes and supervises HSBC for safety and soundness, ensuring adequacy capital.
3. Financial Conduct Authority (FCA) is responsible for making sure bank employees behave properly.
4. Serious Fraud Office (SFO)
5. British tax authority, HMRC (HMRC)
6. Competition and Markets Authority(CMA)

Worrying Doubts:

What is the on site/off site surveillance, monitoring mechanism of the Supervisors in England? 

Why was no action taken by the regulators / supervisors against HSBC?

What is the accountability of the regulators / supervisors?

Does that imply  that you can get away if  you are too big to fail? (TBTF) 

Have we double standards when it comes to big banks?

Where is post BCCI  supervisory coordination efforts? 

Views expressed Without any risk or responsibility

Good advice on credit card

Washington Post:

How to limit your chances of fraud during the holidays

http://www.washingtonpost.com/news/get-there/wp/2014/11/26/how-to-limit-your-chances-of-fraud-during-the-holidays/?Post+generic=%3Ftid%3Dsm_twitter_washingtonpost