The “naughty corner” for miscreant banks and other wealth management institutions is getting crowded and also highlights why compliance is such a major spending and recruitment issue for firms these days. Charges of interbank rate fixing, lax anti-money laundering controls and questionable pricing policies have been levelled - and in some cases punished heavily.

Guaranty Trust Bank

The Financial Conduct Authority fined Guaranty Trust Bank £525,000 ($814,196) for failing to have sufficient anti-money laundering controls for high risk customers between May 2008 and June 2010, at the height of the financial crisis. The regulator said the failings are “particularly serious” because they affected customers based in countries associated with a higher risk of money laundering, bribery or corruption, including accounts held by politically exposed persons.

GT Bank, a subsidiary of Nigerian Guaranty Trust Bank, opened an office in London in May 2008 offering retail and wholesale banking products and services to private, corporate and institutional clients. Its controls were reviewed in 2010 when the FCA’s predecessor, the Financial Services Authority, conducted a review into banks’ management of money-laundering risks.

Sesame Bankhall

The UK’s Financial Conduct Authority fined Sesame Bankhall £6,031,200 ($9.28 million) for two sets of failings: failing to ensure that investment advice given to its customers was suitable, and failings in the systems and controls that governed the oversight of its appointed representatives. The penalty is made up of a £245,000 fine for Sesame’s advice failings in relation to keydata life settlement products, and a £5,786,200 fine for systems and controls weaknesses across its investment advice business. All of the failings relate to Sesame’s oversight of its ARs, which are individuals or firms that draw their authorisation from a principal - in this case, Sesame - with the principal ultimately accountable to the regulator for poor practice.

UBS

The Zurich-headquartered bank agreed to pay around SFr1.4 billion (around $1.53 billion) in fines and related payments to the US, Swiss and UK authorities to settle investigations that Switzerland’s largest bank manipulated interbank interest rates. The UK's Financial Services Authority said that UBS' offences were widespread and "do not make for pretty reading". The FSA said it had found at least 2,000 requests for inappropriate interest rate submissions, as well as a number of emails and other communications about the issue. As part of the proposed agreement with the US Department of Justice, UBS Securities Japan Co has agreed to enter a plea to one count of wire fraud relating to the manipulation of certain benchmark interest rates, including Yen LIBOR. Statements from other regulators were due at the time of this update going to press.

In a separate case announced a few days ago - 11 August 2013 - the bank agreed to pay SFr110.5 million ($119.9 million) to settle complaints of investors who had sued the bank in a mis-selling case of Lehman Brothers structured products. Lehman Brothers, a prominent producer of structured products, went bankrupt in September 2008. The face value of these products collapsed. "UBS is pleased to have resolved this legacy litigation matter arising out of the 2008 financial crisis. UBS agreed to the settlement to avoid the cost and uncertainty of continued litigation. The full cost of the settlement is covered by litigation provisions established by UBS in 2012 and in prior periods," UBS said.

Societe Generale

Japan’s Financial Services Agency in October ordered the suspension of Societe Generale's Japanese private banking business, after discovering “serious violations of laws and regulations”, during an inspection.

The FSA took administrative action against the French lender, after “serious problems that may impede sound and appropriate business operations were recognised, regarding the governance system, the compliance system, and the customer protection management system”.

SocGen had to suspend most of its private banking division, which meant not accepting new money and soliciting for new money, between 23 October 2012 to 22 November 2012. SocGen had also to suspend most of its trust business in the corporate division between 23 October 2012 to 22 January 2013, which the bank said is a non-core asset.

The French banking giant has also been reprimanded by Hong Kong's Securities and Futures Commission for lack of internal controls of its wealth management activities in its Hong Kong branch, leading it to reimburse customers more than $11 million (amounts are in US dollars unless otherwise stated). The SFC raised concerns that, in over 3,000 transactions undertaken between April 2003 and January 2006, customers of the bank's Hong Kong-based wealth management activities paid or received a different price for over-the-counter products, from the actual price transacted for them by SocGen, with the difference, or margin, being retained by the bank as a fee.

Barclays

UK-listed Barclays has incurred penalties from US and UK authorities totalling £290 million (around $455 million) for misconduct relating to the inter-bank interest rate market. Chief executive Bob Diamond, a high-profile character renowned for his large bonuses and hard-charging style in running the bank, has resigned. Lord (Adair) Turner, chairman of the Financial Services Authority, the UK regulator, branded the LIBOR-rigging as a huge blow to London’s reputation as a financial capital. The FSA is probing other banks; a letter sent to the New York Federal Reserve, and recently published, mentioned Lloyds Banking Group as a firm that is possibly implicated. The US Justice Department is carrying out a criminal investigation into the rate-rigging affair. Lloyds has declined to comment on the claims that it was involved.