Compensation in Lehman cases dwarfs potential fines for misconduct
I refer to Glenn Turner's letter asking whether the Securities and Futures Commission (SFC) can explain why the banks which sold Lehman products were not fined ('Banks, too, should be penalised', July 2).
While it would be good to be able to levy fines and obtain compensation for investors affected by misconduct, the law does not enable the SFC to do both and we can only secure compensation by agreement.
In effect, compensation may stand in lieu of disciplinary penalties as an efficient way to expiate the consequences of misconduct.
While we would never accept offers of compensation in lieu of criminal misconduct, it is reasonable for compensation to expiate regulatory concerns where the offer will provide substantial mitigation for the consequences of regulatory misconduct.
In the wake of Lehman Brothers' collapse, we set out a regulatory strategy taking into account our regulatory concerns, the limits of our fining power, the need for remediation and the interests of the investing public.
We have applied this strategy in our dealings with banks and brokers alike.