ORX News digests of the Month: Q1 2018
- 9 April 2018
Every month the ORX News team publishes a featured digest from the ORX News service. It's a detailed look at one of the operational risk losses reported in the media that month, and is handpicked by the team as one of the most interesting stories.
Read on for all the featured summaries from Q1 2018.
March's digest summary
On 27 March 2018, the UK High Court of Justice ordered Lloyds to pay more than GBP 2.3 million (USD 3.2 million, EUR 2.6 million) worth of shares to two former executives over claims that the bank unlawfully withheld their bonuses.
John Eric Daniels, former Lloyds CEO, filed a lawsuit against Lloyds on 14 August 2017 in conjunction with George Truett Tate, a former wholesale and international banking director. The executives claimed that their bonuses were part of a long-term incentive plan (LTIP) linked to the successful acquisition of Halifax Bank of Scotland (HBOS) in 2009. The LTIP, introduced in 2006 and due in 2012, was dependent, amongst other performance conditions, on achieving synergy savings of GBP 1.5 billion by the end of 2011, conditions which were fully met by the executives.
February's digest summary
Along with uncovering a $2bn fraud in February, Punjab National Bank faced an additional challenge after it discovered that the credit and debit card information of over 10,000 of its customers was for sale on the dark web at $4.50 per card.
According to the security firm which uncovered the breach, the information had been available to purchase for at least three months. The security firm’s initial attempt to contact PNB was frustrated when the email it sent to the cybercrime contact address listed on the bank’s website bounced.
PNB is still investigating how the details ended up on the dark web, but it’s likely that the bank’s security was compromised as most of the data came from a single source.
January's digest summary
Deutsche Bank, UBS and HSBC will pay a total of $46.4m to the US Commodity Futures Trading Commission over allegations some of their traders used spoofing to manipulate the precious metals market for five years between January 2008 and December 2013.
Spoofing is the strategy of placing orders to buy or sell a security without then executing a trade, in an attempt to create the illusion of activity around that security and manipulate its price.
Deutsche Bank agreed to a civil money penalty of $30m, and HSBC and UBS were fined $15m and $1.6m respectively.
On the same day, the Department of Justice charged eight individuals in connection with their roles in the spoofing. Although exchanges have barred the practice for years, it was made illegal as part of the Dodd-Frank Act in 2010, particularly in response to concerns over the scale algorithmic trading could lend to possible manipulation.